No, the sky is NOT falling! Nevertheless, there are ample reasons to be concerned that the U.S. and global economies may be heading into a downturn. At a minimum if you've been paying attention to the actions and noise from the Federal Reserve Bank and Wall Street or you've been monitoring trends in corporate investment and spending - let alone U.S. trade activity -- we are heading into unpredictable times.
Volatility may provide new opportunities for deal negotiations (i.e. manufacturing, tariffs, IP, etc.), realignment, reorganization, prioritizing products and services AND demonstrating market leadership. When there is a shift in the economy, PR can demonstrate value by helping clients navigate a changing climate and ensure that the right messages reach the right audiences with the right tone. Developing strong in-house PR capability and agency partnerships will consistently showcase your expertise and put you in front of key audiences. Even when the budget is small, PR and Communications can deliver powerful results.
Over the past two decades, the swings of the global economy have created a meaningful shift in the role of PR. This issue of Marketing Coach presents a recap of observations, opportunities and outcomes that may inform how we prepare for the next economic slowdown.
PR in a Volatile Economy - Look Before You Leap!
Learning from the Past During the Great Recession of 2007-2009, marketing and PR took a big hit in the business arena and elsewhere. Because these functions are more easily trimmed than operating costs, public relations and marketing are often early targets for reductions when budgets are squeezed. The challenge and charge is to make well-defended, case-by-case recommendations about where spending could be cut, where to hold steady and even where to increase it. During 2007 and into the Recession we saw...
Layoffs in senior-level communications positions or cutting mid-level in-house PR staff while stripping the training pipeline Loss of big talent, along with a loss of strategic guidance and approach
A focus on output versus outcomes; reactive reputation management
Cuts to agency budgets, leaving a gap in important resources and advice
Non-strategic content development; pushing out ideas without connecting to timely news or giving thought to audience reach and engagement
The marketing coordinator or middle person designated as lead to reach other company employees or consultants delivering on tasks
Cutting Corners in Communications is Not Without Risk
Companies that continued to support their brands saw them out-perform those who slashed budgets reflexively. An opportunity was created for savvy companies to build deeper and stronger in-house PR and marketing teams, and boutique firms were tapped to replace the big agencies to fill gaps and do project work.
It gave many nimble agencies that understand the dynamics of resilient communications, like my own, a chance to step into the void and demonstrate a streamlined capability to take projects and connect them to corporate/brand goals, deliver more strategic and nuanced strategies, messaging and project development, fill gaps in markets, and offer functional or sector expertise. A reliance on boutique firms lasted for several years and, in fact, continued beyond the downturn, as companies were able to bring senior communications or public relations professionals back who saw the value of maintaining such partnerships and holding steady to weather the next storm.
During 2007, we had clients lay off top PR, communications and marketing executives, which created a void in strategic thinking, decision making and planning. We jumped into action to mentor and support the mid-level and junior marketing staff who were assigned to work with us, and helped them bridge to senior management to raise important questions, prioritize and ensure that PR and communications activities rolled down from and up to the overall brand strategy. We were able to gain access to senior managers to engage them as thought leaders and create deliberate and focused initiatives to get their messages to the right audiences using optimal channels, while taking their budget limitations into account.
Throughout the Great Recession we also worked with senior PR, communications and marketing executives who were required to gut their teams to meet head count goals, and helped them prioritize and organize strategies and projects across brands, departments and initiatives.
Learning from this history reinforces the importance of planning a strong PR program before the next downturn fully hits. The role of PR during a roller-coaster economy becomes even more crucial. As many companies experienced during 2007-2009, cutting back on marketing and PR left the door wide open for competitors who left these functions in place.
Building Communications Resilience During an Uncertain Economy
A bad economic forecast is great media fodder, but the reactive, ripple effect it creates in the business sector can be devastating to those tasked with managing public relations and marketing.
In reality, PR has the same function during a recession as in a healthy economy. PR programs link with business objectives and help establish and maintain mutual lines of communication and understanding between a company and its customers; PR builds a positive image and reputation - all crucial elements to bolster and maintain during a downturn. It is important to understand that waves of discouraging economic news leads to jittery consumer confidence and often erodes buying power, so messages must be targeted to take those factors into account.
Key Points to Guide an Economic Slowdown Strategy
You lose by going dark! Don't confuse or alienate your bedrock of viable customers. The brands that push their stories through the down cycle will remain visible, relevant and competitive.
Don't let your competition define you. When you are quiet, competitors who clearly define their value propositions and are clearly visible accelerate their presence as market leaders and can more easily frame their competitors' weaknesses.
Assess and understand your audience. Who's still buying, who's price-sensitive and who has stopped. Don't waste precious time marketing to those segments you know to be postponing or decreasing their purchases.
Identify the low-hanging fruit. devote resources where you are most likely to connect to your core of loyal spending customers and influencers.
Scale major initiatives down to micro audiences where you have the best proof and stories. Focus on a specific target audience with media that covers it, i.e., trade press, college media outlets, niche online publications.
Write and promote case studies on how you've helped clients/customers solve a problem that helped them through a difficult situation or saved them money
Reinforce an emotional connection with your brand and craft messages that demonstrate empathy with your customers' current situation
Refocus marketing priorities. Determine which are essential versus elective.
Don't stop measuring results. Knowing what works and what doesn't is good practice in any economy.
Prepare for the Next Recession
The fact is that we are living in one of longest periods of economic prosperity we've ever had. Yet we know from history that what goes up must come down. Economists have begun observing a global economic slowdown and there are several major global events that indicate instability that are already putting a drag on the economy. Alongside evidence that global economic indicators have slowed down some, trade negotiations and shake-ups in certain industry sectors are fueling business uncertainty, while fluctuations in some global currencies and economies and political stability are generating volatility in worldwide markets.
Since history proves that a correction is inevitable at some point, having a strategic PR plan in place to future-proof your business and building and maintaining your presence in the marketplace now is just good common sense and what will help you weather the storm when a downturn does hit. The bottom line is that people won't buy from companies if they no longer see or hear from them.
PR is not a place to cut. It is the sustenance that will power you through the good economic times as well as the bad.
Ivy Cohen Corporate Communications helps companies build reputations and differentiate in a competitive market through thought leadership, public education, issues management, content strategy, and strategic communications. To find out how ICCC can help you and your company build your reputation contact email@example.com, call 212-399-0026 or visit www.ivycohen.com.
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