E397: I made this episode right before news of today’s financial crash went viral. The timing could not have been more perfect.
This directly answers the question of whether or not it is worth investing in marketing during a financial crash or recession.
The thread I’m sharing: https://x.com/ValKatayev/status/1589287819117109248
00:00 The Billion-Dollar Strategy 00:15 Where I Am 00:34 The Recession Strategy 02:24 The 2000 Recession 03:46 The 2008 Recession 04:33 The 2020 Recession 05:48 Why Doubling Down on Marketing Works 09:22 Conclusion: Recessions as Opportunities 10:32 Podcast Wrap-Up
#digitalmarketing #marketingstrategy #paidmedia #marketing
The Edward Show. Your daily digital marketing podcast: https://edwardsturm.com/the-edward-show/
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I've generated over a billion in sales using one strategy. Used it in every recession, 2000, 2009, 2020. I've never shared it publicly before. This thread might make you a millionaire. That's what I'm reading to you today on the podcast. If you are watching what you were seeing behind me, it is not a green screen background. I am sitting in this lovely garden in another luxury hotel out here in the European city that I'm in. And I was reading this thread this morning, and I was loving this thread. I was loving it so much, I said, "This is what I'm sharing today on the podcast." This is from Valcatia. Valcatia just built a building in the neighborhood in Brooklyn that I am from. And he's building another building in another neighborhood in Brooklyn, which I lived in for three years in Williamsburg in Brooklyn. Super successful guy, and I was just loving this thread so much. It validates a lot of the stuff that I say on the show and a lot of the stuff that I think myself. So this is what he says, "During every recession, everyone cuts down on marketing. I jack up advertising spending and win the market. During boom periods, CMOs, chief marketing officers, take over and businesses play on offense. They focus on growth during these boom periods. During recessions, CFOs, chief financial officers, take over and businesses play on defense. They start to cut costs. When finance people smell a recession, the first thing they cut is marketing. Why? Marketing is generally the easiest thing to cut. It makes chief financial officers feel like they're making instant impact on profitability. This chart, and if you're watching, I'm showing the chart. This chart illustrates how businesses manage ad spend in the face of recessions. In 2009, the global economic pullback was just minus 0.7%. But advertising spending dropped a whopping 10.1%. So in 2009, the economic pullback was only negative 0.7%, but advertising spend dropped 10%. Conversely, this gardener study debunks how some leading businesses accelerated during the recession. The most efficient growth companies maintained or increased marketing spending during the recession. And then they broke away as winners. Val Katia, he's the author of the thread. And I'm going to link to this thread in the description for the podcast. Val continues, he said, I saw this play out firsthand in three different recessions. In 2000, the internet bubble popped. Everyone stopped advertising online. It was almost like everyone decided that the internet was a fad and that it was over. Val Katia, he was one of the first people doing paid advertising on Google. And at 19 years old, he built a $30 million business doing search engine marketing with Google. And he was one of the most coveted search engine marketers. There was when there wasn't a lot of competition in the space, made a ton of money at 19 years old. So he continues, he said, at the time, so this was the early 2000s, at the time, I had a little video game content website. This was right as he was getting into performance marketing into search engine marketing. He says, at the time, I had a little video game content website and I would sell ads on my site to advertisers. Those advertisers would pay me per sale. Performance marketing, I noticed that ads on my site were actually bringing them sales. So I started renting ad space on other websites to bring them more sales. These other websites had a ton of traffic. During 2000, it seemed like all advertisers pulled back. Ad spots that would normally go for $5,000 were selling for $1,000. It's 2000, there was a recession. And advertisers were pulling back, there wasn't as much competition. So val goes, I doubled down on advertising and it turned into a very profitable business that led me to be Google's second biggest client at one point. This would play out all over again in 2008 after the great recession. Lyric's websites at the time had the most internet traffic after porn, like 500 million eyeballs. I bought up exclusive advertising rights on these Lyric sites. Thanks to the recession, locking in exclusive deals was easier. There was a lot of uncertainty at the time and everyone was ready to take my money. I blitz scaled the business by 500% from $2 million to $12 million in profit in just one year. After the recession was over, my clients were much bigger than their competitors. I know this because they sustainably increased their marketing spending by 300% to 400%. In some cases, they were the only companies left in their respective category. So its clients were increasing their spending because it was working so well. Then fast forward to 2020, COVID hits. My new company, Jocaleo is building a backbone infrastructure for independent jewelry retailers. We integrate drive customers to these stores and supply jewelry to them. Most of those stores were forced to stay closed during COVID. However, we convinced most of them to continue marketing and it paid off big time. We helped them stay in front of their customers throughout 2020. And then we saw, and this thread was written in November of 2022. So he goes, and then we saw the data showing customers buying different types of jewelry, pieces that can be seen on Zoom calls such as earrings. So we doubled down on this. In 2020, we launched a program that would grow jewelry stores to new heights. The competitors in each of their markets were sleeping, scared to market. They cut all their costs, especially marketing. These local jewelry stores that we helped moved up from being number two, number three, and number four in their market to number one. And those who are already the number one players in the market just put a ton of distance between them and the smaller players. Many of those smaller players didn't do so well. The people who cut back on marketing, they didn't do so well. On the other hand, our clients in some cases doubled in revenue. I've shared three stories of how I've doubled down on marketing in three recessions and it worked every damn time. Let me explain why it works. Two major reasons. Reason number one ads become cheaper during this time. Facebook and Google ads are free marketplaces. There are billions of dollars competing for the same finite eyeballs ready to pay one dollar, two dollars, five dollars, or ten dollars per click. In boom periods, people with the most money outcompete other bidders. During recessions, marketing spends dry up and you get access to millions of eyeballs at a discount. Dollar for dollar recessions are the most efficient periods to invest in ads. The key is to use those dollars effectively and adjust the messaging with the times. For example, 2020, everyone sees your face on the zoom call, so market earrings. 2022, people have less disposable income, but a big minority is still flush with cash. So our advertising makes our entry price points lower and top price points higher to capture both sides of the market. Reason number two ads become more effective. When competitors cut marketing, they stop reminding their customers about their existence. This is exactly when you want to figure out how to do more marketing, not less because your share of the voice goes way up. This doesn't just apply with paid ads, it supplies with organic as well. A lot of what I share on this show, on this podcast, is about organic marketing. It's not paid marketing, not that I have anything against paid marketing. I just genuinely love organic marketing, but the same principle applies. When competitors cut marketing, they stop reminding their customers about their existence. This is exactly when you want to figure out how to do more marketing, not less because your share of the voice goes up, you get more top of mind awareness. Instead of people thinking of their competitors, they are thinking of you. Say a customer was seeing 30 minutes of cookie ads in total, 10 minutes each from you and two other competitors. When your competitors drop their spend by 50%, the customer sees 10 minutes of ads from you and five minutes each from two businesses. Not only is that ad spot cheaper, but in the absence of competition, it's also more memorable. Before, 10 out of 30 minutes equals 33% of the share of voice. I love this so much. After 10 out of 20 minutes equals 50% of the share of voice, roughly 1.5 times the attention for no extra cost just because you're continuing to advertise through a recession. Harvard Business Review covered several cases. Here's one. During recessions when most firms are cutting back on their brand advertising, a firm's share of voices from Harvard Business Review, a firm's share of voice increases if it can maintain or increase its advertising budget. Take the case of Wreck-It Bank Kaiser. In the recession following the 2008 financial crash, the company launched a marketing campaign aimed at persuading its consumers to continue purchasing its more expensive and better performing brands despite the harsh economic climate. Increasing its advertising outlays by 25% in the face of reduced marketing by competitors, the company actually grew revenues by 8% in profits by 14%. When most of its rivals were reporting profit declines of 10% or more, they viewed advertising as an investment rather than an expense. The thing is recessions generally don't last long, as shown by the thin gray lines below. So there's another graph here that I'm showing. If you're not watching it, that's okay. This is what it says about the graph. So if you cut in other areas, but focus on growing your presence through marketing, come expansionary times, your exposure in gravitas will be two times bigger than each of your competitors. And once you get that far ahead, it becomes hard for others to catch up. You become the big dog. And that is the thread. I freaking love this thread. It's from Valcatea. I'm going to share it in the description for this podcast. And I read this this morning and I said, "I got to share this because this is good." And it gets me hyped. I love stories like this. You know, I actually heard a few days ago, I was listening to the All-In podcast. I was going on this long bike ride through this city that I'm in. And I was listening to the All-In podcast and they said, "Times are looking recessionary. We're either in one hour, things are going to become worse." That's what they thought. And this is kind of messed up, but it got me excited actually because it means as I continue marketing through it, I'm going to get even bigger, even faster. Because lots of people are going to stop their marketing efforts. And so my top-of-mind awareness will go up. When this product comes out, I will be competing with less people to sell the product. I'll get more market share, more people when they think of my niche, they will think of my product. When they think of SEO, they will think of Edward's bottom of funnel keyword product. It's a known thing. People, it's not just advertising. People stop organic efforts in bad times too. If you've been watching the show for a while, if you've been listening for a while, if you've been seeing what I've been doing on social media for a while, you know that I don't stop. And I think that's a good time to end this episode of the podcast. This is episode 397 of my daily digital marketing podcast, which is really daily. I have done it now every day in a row for 397 days. Because like I said, I don't stop baby, I keep the party going. I have made a daily short form video. I think for now around 650 days in a row, I don't stop. I keep going through bad times and through good times. Every day is a great day for Edward Sturm. If you watch me on Instagram, you'll know that every morning I post on my story. Every day is a great day. Every day is a great day. And I hope every day is a great day for you too. Because I truly feel like every day really is a great day. Thank you so much for watching. Thank you so much for listening. Hope you enjoyed this one. I will talk to you again. I'm going to talk to you again tomorrow.
