How UGC Can Help Recession Proof Your Brand

50% of people say that they are already experiencing financial hardships due to inflation (Gallup). Most brands are already cutting budgets or see it on the horizon due to the fact that their consumers are already watching their spending more frivolously. During these times, the best way to keep your audience is through brand loyalty that is fueled by trust and transparency. UGC checks all of those boxes and will be less costly than traditional advertising. 92% of consumers trust UGC more than traditional marketing and it cost 62% less than traditional marketing, according to Demand Metric Report. Brands and ad agencies listen up. This can help you during times of economic downturns that result it cut backs on advertising budgets. Harnessing the affordability of UGC campaigns can save your brand a ton of dough and time since the turnaround time is much faster than production campaigns. You can save money while increasing brand trust through adopting a UGC campaign strategy for your ads. It’s really a win, win situation so what are you waiting for?

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Is Brand Loyalty Immune From Economic Downturns?

The economic climate in the U.S. is changing. We all know it. Even though it hasn’t been dubbed an official recession yet, consumers already have. Let’s be honest, that’s all that matters because their perceptions determine how they purchase. 70% of the American population think that the recession is already here, according to an article in Media Post. However, according to a study done by Brand Keys, 38% of industry categories have reported decreases in loyalty whereas, 44% have seen it grow. Why is this? Does this indicate that brand loyalty may be “recession proof” depending on the field? While we don’t have the answer, it does indicate that consumers will have to adjust their spending, but it may not affect their loyalty to brands that they love. Industries that are tied to economics seem to take more of a hit than others when it comes to loyalty. This depends almost entirely on how the brand’s marketing deals with economic issues during downturns in economy. Loyalty can actually be strengthened during economic downturns since customers will concentrate spending with companies that they trust. Brands who focus on protecting and growing loyalties during these times of unrest can sustain loyalties and revenues. It can be difficult but it’s not impossible. You need to know your core audience and how they’re being affected. What changes will they have to make and how can you appeal to their needs during these tough times? Although, we cannot give you the answers to these questions because they will be very different for each industry and audience group, we can give you a couple of tips that may help your brand keep its loyal customers. That being said, according to Bain & Co., there are three distinct characteristics that can make a brand stand out as a loyalty leader during economic crisis. One, they don’t try to discount too aggressively. It can be hard to keep customers once the downturn is over when prices increase again. Two, they apply practical means to keep their most important audience before others. Keep that core group at the front of your mind when making marketing decisions. Lastly, they identify critical moments that positively impact their customers most. This can be done through a simple “rate your purchase or experience” questionnaire. In the end, we all know it’s easier and cheaper to keep customers than to gain new ones. Customer satisfaction will keep loyalties high while spending is low.

Advertising Predictions 2022

2021 was a great rebound year for advertising after the catastrophic one that preceded. Now that some of the dust has settled, we’ve been seeing inflation; interest rates increasing at sizable rates and stocks dropping significantly. A recession is now predicted and feared to be here sooner than later. But what does that mean for the advertising industry? Let’s look at some history for some insight. According to AdAage, U.S. advertising spending decreased for the previous four recessions back to 1991. However, the really rough recessions before that, the kind that were “marked by periods of double-digit inflation,” advertising spend actually increased. For example, ad spend during the recession of 2009 was down -10.2% and the following year it increased to 8.8%. So, how do we know which will happen this year and the one following? Well, we don’t but we can speculate. At Locomotive we are optimistic. We expect a slight decline but not a full halt. We also believe we will see another large increase in digital marketing, just as we did in the midst of the 2020 pandemic with sourced content. Why, do you ask? Well, for one, it’s more cost efficient. With the rising cost of goods and services, agencies can use their budgets more efficiently with advertisements that utilize user generated content. Publicis Group’s, Zenith, expects internet ad spending to increase to 71% by 2024. Zenith also predicts overall ad spend to decrease this year to 11.6% from 18.7% in 2021. With that being said, it’s expected it to continue to drop in 2023 then begin rising again in 2024 with smaller gaps between overall advertising spend and internet ad spends.

Sorry! We know we just threw a lot of stats at you. It’s important to look at the past trends in order to predict what may be ahead. In summary, we expect internet advertising budgets to increase greatly. We predict that will inherently increase the number of agencies that utilize UGC content in their campaigns. We expect this, in part, due to increased budgeting caused by inflation.  The efficiency through using sourced content campaigns helps advertisers get better bang for their buck! It’s more cost effective.  We do expect this year to slow down, and most likely the following, but we have high hopes that it will slowly begin to increase again and we will see the trends from the earlier major recessions before 1991.