Savvy executives and retailers aren’t surprised, as they’ve likely closely watched consumer sentiment sink in the past months. Whether it’s a self-fulfilling prophecy or not, consumers are cutting back on spending - from luxury or nice to have items to everyday staples.
So what is a brand to do? A difficult economy requires a more nimble approach and brands need to be taking a good hard look at their overall strategies. Code3 Executive Leaders consistently emphasize this topic in discussions with both existing and potential clients, underscoring that focusing on brand, awareness, and education strategies isn’t just important—it’s absolutely critical for success.
What Does This Mean for Your Brand?
In times of economic downturns of recessions, many brands may be facing potential or impending budget cuts. And it’s typical that when that happens, the instinct is to adjust advertising strategies by cutting upper and mid funnel tactics, in turn preserving ROAS and driving efficiencies. However, this is actually the worst move a brand can make, because in most cases, the result is reducing incrementality and stalling revenue growth.
Bottom line: the time of focusing solely on performance initiatives such as bidding on the right keyword are done. Brands will win or lose customers in the mid and top of the funnel, and post-2020, many brands shifted all their dollars to the lower funnel. To succeed in 2025, a strategic shift is necessary, and it must begin now.
For brands who are new to, or increasing investment in mid- and top- funnel strategies, Code3 Strategists recommend beginning with implementing a measurement strategy. This is particularly critical when it comes to measuring incremental growth. If brands don’t have a true, accurate understanding of what’s driving incremental growth within their consumer base, they are simply going to fail during difficult economies.
On the flip side, brands who leverage measurement, tools and partners to make informed decisions will have a clear understanding of what media channels are driving incremental value for them, and where there is opportunity to further scale without diminishing returns.
Additionally, creative will matter now, more than ever. Creative shouldn’t be simply beautiful: it has to be beautiful AND inspire connection. If consumers don’t really feel the value of a product or brand, it’s going to be one they cut or substitute with a lower priced item.
Consumers are More Discerning
Code3 Strategists consistently root strategic conversations in consumer behavior data, where and how a consumer decides to navigate their purchase journey is impacted by more variables than before given today's economic and political climate. It’s simple: value alignment is becoming a much bigger part of a consumer’s consideration set.
The perfect example is Target, a longtime mainstay for many shoppers. While Target may be the most convenient, aesthetically pleasing with the best selection, there are shoppers who are currently refusing to shop there due to their choices around DEI. Target is feeling the impact, too - their stock price is down 24% from January 24 to March 15. Additionally, according to data from Placer.ai, foot traffic for the retailer has fallen YoY for six consecutive weeks.
To stay ahead of value alignment, brands should renew their focus on their conversations and interactions with consumers, focusing on:
- Perception of quality
- Customer reviews
- Exceptional customer service
- Return policy
- Alignment of beliefs (not just DEI, but sustainability and more)
If your brand sells at a variety of retailers, building an overall strong brand presence is of the utmost importance, so that consumers will seek your brand out elsewhere if they make the decision to stop shopping at a certain retailer. At Code3, this is why we use tools like MikMak that allow visibility into retailer availability, empowering consumer choice.
Is a retailer like Target a big portion of your products consumption and you’re seeing sales decline due to consumer choices? Then strategies to focus on other key retailers may be important. While it’s a delicate balance to not ruffle feathers at retailers, we recommend brands always use a lot of multi-retailer messaging strategies for this reason such as: “Now available at Target, Walmart, Amazon and Costco.”
As an additional tactic to improve their multi-retailer approach, brands can leverage partners such as The Trade Desk, LiveRamp and Amazon DSP to target shoppers at specific retailers such as Target, then serve them messaging on STV about the brand product, increasing awareness of where they can buy using the multi-retailer messaging strategies.
If your brand is working through Amazon DSP, brands can also pair these audiences with all of Amazon signals, combining them into a larger audience of shoppers who shop at Target for competitors' clients. This makes the strategy even more impactful, and is a great tactic to attack share of wallet from a competitor at a retailer that is important to your brand.
At the end of the day, consumer behavior is in a constant state of change due to factors well outside of brands control. The best way to weather the storm comes down to 3 main themes:
- Deeply understand what is important to your consumer and ensure you are reflecting those things in your messaging and actions as a brand.
- Partner with a strong agency who can help you navigate a shifting landscape. If consumers are withholding spending, having an agency that stays on top of those trends and works with you to shift strategies as necessary will be key.
- Avoid the ROAS fallacy at all costs. Leverage incrementality tools to understand which channels are actually driving growth vs those who are taking credit for conversations that would have happened anyway. Having a strong measurement strategy will give you confidence in your decision making and making a business case internally.
The economic uncertainty happening currently is something all brands should be keeping a close eye on, and adjusting as necessary. Being incredibly nimble with strategy is critical - more than ever.