SAVE THE DATE: Sleep Summit Oct 8-11, 2024

Recession Proof Your Advertising

Low sales should not mean you ease back on marketing. 

On the contrary, those who stay the course with their marketing strategy or increase fair better not only during the recession, but for years afterwards.

Back on today’s FAM Marketing Show co-hosting alongside Mark Kinsley and Adrienne Woods is Eric Grindley, Founder and CEO of Esquire Advertising. In this episode, Eric gives insights into marketing during a recession – how to pivot and how to make back your return. He states,

“McGraw Hill did this study, um, where they, they studied 600 different companies… what they found… is that for the stores that continued to advertise… through a downturn in the market or through a recession, that they, when they came out of the recession, they had more market share, they had a higher increase in sales, as compared to those that did not advertise.”

Listen or watch and learn:

1) How to determine what is discretionary spending in your business when it comes to advertising and

2) How technology has evolved since the last recession and how hyper-targeting could help you. 

FULL TRANSCRIPTION

Mark Kinsley: How do you recession proof your advertising? Is it possible we, Hey, we have data on what happens when you continue to advertise during a downturn. Most businesses completely ignore these best practices.

Welcome to the Fan Marketing Show Strategies, tips, and ideas to help retailers and brands grow their furniture, appliances, and mattress. So excited to have Eric Grimley back on the show. If you missed the O T T. Democratizing streaming TV advertising episode with Eric. You have to go back and listen to this.

It is absolute fire and it’s a place where I know a lot of people want to participate, but they weren’t able to do that because they thought, Hey, people have cut the cord. What do I do? How do I get my ads on the streaming services? Eric took us to school on that in such a good way. Eric, welcome

back

Eric Grindley: to the show.

Hey, thanks for having me. We’re

Mark Kinsley: so excited. We’re talk about recession proofing.

Eric Grindley: Oh yeah.

Adrienne Woods: Which I think everybody’s

Eric Grindley: gonna need. Yeah, right. You know, it’s like, uh, the economy’s not exactly doing that well and, um, you know, everybody’s kind of coming off the highs of, uh, really, I mean 20 20, 20 21. Um, and, uh, and now having to settle back into the reality of, of what it’s like to, uh, Actually work to make your

Mark Kinsley: money, you know?

Yeah, that’s right. Having to work for it and you know, we got really tough comps and sometimes, you know, speaking of tough, we have really tough trivia questions most of the time. But I think today’s gonna be easy. It’s just, there’s a gut

Adrienne Woods: feeling I have. Um, it’s gonna be, it will be easier cuz I was told to make it fun.

So , it’s, I don’t know if it’s fun, but it’s different. So for our trivia question today, simple. What year was Google

Eric Grindley: founded? Oh, was it

Adrienne Woods: 1995? 1998 or 2000?

Mark Kinsley: Okay, the 95 and 98, that’s where it’s gonna be closed. Okay. Eric, don’t answer yet. Yeah, don’t answer yet cuz we gotta save this for the end of the show where you’re gonna make our guests and Adrian’s gonna reveal the truth behind it.

What year was Google founded? I can’t speak automatically. Know

Eric Grindley: this? I mean, yeah, well you would think you do. Like I think of things in terms of like my, you know, life. So I think of like, okay, well in 95, where was I? Like, did we have a computer? , yes, we had a computer, but it wasn’t very good. There definitely wasn’t Google back then.

You know what I mean? Like, so like, you know, it’s like fair, you know? Or, but, but, but then like, they may have found it, it might have been working on it. Like that’s, you know,

Mark Kinsley: that’s a different story. Absolutely. Story changes. Absolutely. I think in 95, I did have internet for the first time, but my friend, I’m not gonna say his real name scrub, that’s his nickname, I swear.

But he had figured out how to enter a code into the Dialup internet service that bypassed the long distance. And. Masked the number and gave us free Dialup access because he was hooking it up for other people. And I didn’t know what was going on, but I’m like, this, is this okay? He’s like, yeah, it’s totally fine.

I mean, looking back, I’m not so sure.

Eric Grindley: Yeah. All right. Yeah, I know. Yeah, it’s interesting. Um, you know, there’s, there’s still people out there that still use Dialup, um, even in the marketing world. Um, it’s a, an old spammer trick that they will use, dial up to send spam email because every time you plug, unplug the telephone line, plug it back in, you get a new IP address so like you can spam the world using dial up, um, very,

Mark Kinsley: very slowly.

One very slow.

Eric Grindley: Doesn’t spam, doesn’t matter. They want it to go slow, right? So, but um, anyways, that’s, we’re not here to talk about that , so.

Mark Kinsley: Hey, we are, are here to talk about a timeless topic. Yeah. Uh, and that is recession proofing. You’re advertising. A lot of people talk about recession proofing your business.

And as the economy gets a little sluggish, as we’ve seen the market, uh, become very, very difficult, um, people are thinking about ways oftentimes they can cut back. They’re thinking about ways they can get lean. They’re thinking about things they can do inside their operation that might adjust so they can have, uh, you know, improved bottom.

When, whenever we’re talking about advertising though, a lot of times it’s a line item, uh, it’s a percentage of sales. A lot of people treat it different ways in terms of how they resource that or allocate funds toward advertising. Yeah. So let’s talk about it from a data standpoint. What does the data say in terms of should we or should we not trim back our advertising?

And how do you think about recession proofing

Eric Grindley: your. Yeah. So, um, I mean, uh, you know, like the topic is kind of loaded in and of itself, but I mean, um, you know, like, here’s the thing is that almost everybody looks at advertising expense as discretionary spending, right? Like it’s, you know, for the average store, they’re like, I, you know, I pay this 5,000, 10,000, $50,000 a month bill in advertising.

Um, and most of the time the reason why they look at it as discretionary advertising is because they don’t actually know what it’s doing or how it’s. , you know, um, 90% of the retailers out there have literally no clue what any $1 they spend on advertising does. Um, they just, you know, they’re, cuz they’re, they’re, they’re advertising in ways and in mediums that they can’t track it.

They don’t have any proof of attribution. You know, direct mail is like one of those things where everybody puts money into direct mail. Um, you know, the best direct mail campaigns in the world, uh, like the best direct mail campaign actually in the world was, um, uh, done by McDonald’s for the, uh, um, monopoly game back in like the, the nineties, right?

Um, oh, I loved that game. I played. I played it amazing best direct mail campaign ever in existence, right? I mean, um, if you were to look at like, what that did for, um, you know, usage rates, the usage of, of still, of the direct mail piece that went out was still under 5%, right? So best campaign ever in the history of time still did less than 5% actual usage of those things they’re going to.

So if you think that your direct mail. For your furniture store, that to advertise your 20% off sale this weekend is actually doing anything. You are sadly mistaken because the, like, it’s, it’s never gonna compete with McDonald’s and they only got 5%. So you’re lucky if you get close to 1%, you’d be really lucky.

So, um, so like we look at all these expenses and we say, Hey, well this is discretionary spending. We, we gotta get rid of this stuff because we don’t know what. Well, you, you do need to get rid of that stuff because that stuff is not working. But you could also be doing other things that are working. And, um, the, the proof is in the data where, like McGraw Hill did this study, um, where they, they studied 600 different companies all from the retail industry over, I think it was like 15 or 16 different, um, you know, niches, right?

Auto dealers, furniture stores, big box retailers. They did, uh, a complete study of this. And what they found was really interesting is that for the stores that continued to advertise through a downturn to, through a downturn in the market or through a recession, that they, when they came out of the recession, they had more market share, they had a higher increase in sales, um, as compared to those that did not advertise.

The ones that did not advertise. Uh, some of them went out of business. They saw a 0% increase in market share, and when they came out, their increase in sales from the low of the recession was only an 18% increase when compared to those who advertised, saw a 250 or so percent increase in sales off of the recession numbers.

And those businesses that advertised during that time didn’t go out of business. They, they were continuing to grow during that time. They survived. Right now, were they flourishing and having all of this money flowing to them during the recession? Probably not. But they survived. And the ones that didn’t advertise did not survive.

And even when they came out of it, they were, they were lower. And so, you know, there’s a lot of data to support this. And like a lot of people even know the story of Ashley Furniture. You look at Ashley Furniture in 2008, you know, when the, that recession hit, you know, um, they were nowhere near as big as they are today.

And the reason for it was that the Onex said, Hey look, we have an opportunity here, opportunity here to go to war. We can, we can, we can hit the ground running, we can push into this, and we can come out bigger and stronger and better. We can get more market share. We can advertise to the people and we can expand.

And they did. And now they are the biggest retailer in the world. Right? So, um, and it’s not to say that everybody out there listening is gonna be the next Ashley f. But you know, you have to, um, sort of take notes from all of this information and say, Hey, well, like, they’re not gonna stop. They’re gonna keep pushing into it.

Flexsteel just said on there, um, um, their, their uh, um, investor call recently on their earnings call, like the CEO was saying, Hey, look, we’re gonna push into. Uh, the recession, right? We’re gonna advertise into it. We’re expecting to spend more. We’re gonna, we’re gonna push because they’re smart. They know that this is not discretionary spending, that this is something that you have to do now.

But, you know, look for every, the everyday store, they’re not a Flexsteel. They’re not an Ashley. They don’t have those kind of budgets, so they’re gonna obviously tighten up. But there’s ways to advertise during a downturn, d during a recession where you can still be profitable and you don’t have to spend as much money.

Um, you can, you can, you can cut some spending here and there, but so the idea that you’re gonna drop everything, or that you’re gonna stop doing the things that are the most efficient would be a really bad idea. And so you, it all comes down to understanding and knowing your customer. If we understand and know our customer better, then we can find the right people to advertise to and advertise just to those people.

And maybe that’s on o t t like we talked about before. Um, maybe it’s on social, maybe it’s on any of these different places that we do things, but, but you have to be able to find that right audience and talk to them. In finding the

Mark Kinsley: right audience. How do you think about that? Because when I hear recession proofing your business and the study from McGraw Hill, I think Okay.

You’ve got, um, the study that really looked at what was happening during a recession. You know, some people advertised, some people didn’t. Mm-hmm. , and on the backside of that, I think it was a 250. Jump in business for the people that continue to advertise. So that advertising they did, you know, like, like you said, they kind of maintained their business during the recession and they saw this big spike on the other side.

The spike could be attributed to, to a few different things, but I think about the manner of advertising, um, maybe a little bit different during the recession because. . Think about this. Are you gonna advertise to in-market shoppers? Yeah. You’d love to get those. During a recession, people are throwing off the signals that I want what you have.

However, on the backside when you see the big jump, it might be more brand driven advertising during the recession, so you stay top of mind so that a pin up de demand comes your way whenever the floodgates do open. How do you think about those two kind of variables or streams

Eric Grindley: of thought? Yeah, I mean like, so, you know, it’s interesting, you know, like.

Technology and advertising has advanced so much since the last time we had a recession that like, you know, like targeted advertising existed in 2008, right? Hyper-targeted advertising did not exist. Um, so, um, the ability to target, you know, groups based on interest and demos and things like that that existed.

You know, you could pull some levers, you could throw an ad up, and it was actually really powerful back then. But one of the main reasons why it was powerful back then was because people were not used to it. Consumers were not used to being given an ad that was relevant to them. And so it was like, wow, that, you know, things started resonating more and like you weren’t getting so bombarded that like it was able to drive more engagement, more sales.

Well, then you go through time, right? And then people go, well, I’m getting way too many advertisements, right? And so, um, so then those things start coming on to blind eyes. And, but now we’re in a world where hyper-targeted advertising exists, where I can serve Mark Kinsley, an individual advertisement that is going to resonate with you individually.

Um, and so when you talk about knowing your customer, what I’m talking about is understanding who buys in, in each one of your stores, you have five. The customer in each one of them looks a little bit differently. They’ll all look the same to you when you’re standing in the store. But when we pull them out of your store and we look at their data, they look differently.

And even when you look at the person that bought mattress A in store one or mattress A in store five, those people are gonna look a little bit different. And that’s a great thing for marketing because if we can pinpoint those minute differences, then we can use them to find you the right consumer for that individual store, that individual product, that individual brand, that individual category code, right?

Like we can go so direct to that person that we can be extraordinarily efficient with the money that you’re spending on. and then we don’t have to guess whether or not it worked or not. We actually match up the in-store sales to the online ad, and we know, so that way if something doesn’t work, then you can optimize from there.

So, you know, like when, if we had that back in 2008, uh, I’m sure businesses would’ve seen even in more extraordinary jumps. Um, because like yeah, you don’t want to necessarily go after all the in-market shoppers. Um, most of our clients don’t go after all in-market shoppers anyways, because not every in-market shopper is your customer.

It’s like the hardest thing to like kind of teach people is. Like, well, I wanna go after new movers. Yeah, everybody wants to go after new movers, but not every new mover is your customer. Like there might be 5,000 new movers in Dallas that are your customer, right? There’s 55,000 new movers in Dallas a month.

Um, you know, there, there might be 5,000 that resonate with your store. So focus on the 5,000. You don’t bring in 5,000 people to your store a month as it is right now anyways. So if I can find these 5,000 people and I can bring in, you know, 500 of them that are going to buy, then you’re gonna be exploding as a business and.

you can optimize someone’s foot traffic over time. You know, we’re, you know, you can, you can really get it. So that way there are whole entire marketing model to then sale model is super efficient. They’re spending less money, they’re spending it more efficiently, they’re getting better customers in the door.

So then their RSAs, when they stand up to do a sale, the person’s ready to buy. Right? So, so, you know, yes. Like, you know, you’re gonna have to cut some little expenses here and. But if you use the money more efficiently, you can cut your expenses while still advertising the right people in your market.

Continue to grow the business, continue to grab market share, and then come out of a, a downturn stronger than stronger than ever. And even during this time, you’ll probably maintain, like, um, I was telling you, um, you know, if we did a study. Um, on our retailers that we worked with throughout the United States versus their competitors in their markets.

And we wanted to understand, because this year has been a weird year, right? Like, um, you know, I think if you look at the stats, like it was like, uh, in 2020, um, I have a note somewhere, like it was like 2020 sales went up like 7% nationwide. Then 2021, uh, retail sales went up 14% nationwide, right? They’re predicting that, um, sales for 2022 will end up six to 8% higher than it was in 2020.

But what they failed to tell you when they had that prediction is that that prediction is based on essentially what happened in the first quarter of 2022, right? Like, like, yeah, it’s gonna end up 68% higher because so many people made so much money in the first quarter of 2022. But then after that, people started getting really hurt by low foot traffic numbers.

And so when you look at the year’s worth of data, um, for foot traffic across the United States, Uh, retailers that were working with us, they were always far and away higher than their competition. Um, so like in, like the smallest one was like a handmade furniture store that we worked with in Pennsylvania that did, uh, they were up 37%.

Over their competitors, um, in their market in foot traffic, right? Um, the higher end ones were up in the 200 to 300% higher than their customers. And even when there was a downturn in their market, they saw less of a dip. And the reason for this is because all of our clients advertise nonstop 24 7, 365 days a year.

we do not stop in between sales. We run a branded advertisement during, uh, non-sale times, right? We, we work on their brand image, we work on their brand exposure, and then when the sale comes along, yeah, we make sure everybody knows about the sale, but we never stop advertising. And when you never stop advertising, you get this groundswell effect that starts to take over, share a voice, and it makes the whole business grow.

So, um, these other stores that are out there, they’re coming in and going, well, I have a President’s Day sale. I have a Memorial Day. And then like, everybody’s like, well, they were completely out of mind for three months. You know, like, I didn’t even heard of them. So they have to now go back and try and, um, rebrand their store in the mind of this consumer.

I’m branding my my client’s stores in the minds of those consumers every single day. We do that on purpose. So that way when you go out to go shopping on Friday or Saturday, you go, Hey, I’m going there because they know everything. And

Mark Kinsley: if you look at some of the best in the business that have been through multiple recessions, Uh, all kinds of challenges in, in terms of business conditions.

You just look at mattress mac of all people. Oh yeah. He says fearlessly promote and never stop promoting. And he is advertising all the time. And not just, not just since he became, uh, the business that he is today with Gallery Furniture, they’ve never stopped advertising. I think it’s great advice and I think when people are trying to get more surgical about it and trying to spend dollars more efficiently, uh, this is how they can do it.

You have to put everything under the micro. And make sure you’re, you know, being a good steward of the funds you do have. Uh, but it, but it doesn’t mean disappear because you’re totally right. I mean, I even remember businesses that friends of mine had, you know, they accordion down during the recession.

and then they went to four day work weeks and their competition went out of business. And when they came back, they just experienced explosive growth. Yeah. So it’s a time for bravery and it’s also a time for being very smart with where you put your time and attention

Eric Grindley: to dollars. I mean, I think, look, if you’re gonna, if you’re gonna look at the downturn in the recession, um, as a time to stop advertising, you are giving up and you’re saying, Hey look, I’m willing to just let my business.

It’s, I mean, I really do think it’s that simple. Um, because like when, when downturns come, that’s not the time to pull back. That’s the time to fight and push harder. Like, um, you know, I, I talk to a lot of manufacturers at market and, um, and I, I don’t, I’m not gonna, I won’t say exactly who this was, cause I don’t know if they want me to say this or not, but, They look at this as going to war.

They’re ready to go to war, to to beat this down, right? Like so. But I think that that is like, that’s the mentality you have to have. This is your livelihood. It’s your business. Either you’re gonna stand up and fight and you’re gonna find a way to survive. And you’re gonna do that through finding new customers in new ways.

You’re gonna try new things, you’re gonna be more efficient with how you operate your business, or you’re gonna resolve yourself to just letting it die.

Mark Kinsley: And the people that I know in this business, They’re not willing to do that. Eric Grimley, c o of Esquire Advertising, man, you’re a wealth of knowledge.

Thank you so much for coming back on the show. Uh, I feel like we just need to do another episode about some of the core business. That you do in terms of how does all of this work? Yeah. It seems really creepy to some people and it’s totally it. It may be, and it works because you can find in-market shoppers, you work with lots of clients in the furniture mattress industry and appliances industry across the us.

Uh, so thanks for being on the show. Thanks for coming back. And we gotta close the loop on this trivia question, Adrian. It’s, it’s the founding of Google. When was Google founded? Yes. Right? Yes. When was Google founded? 1995.

Adrienne Woods: Is that right? 95, 98 or 2000.

Eric Grindley: Hmm. I’m gonna go with

Adrienne Woods: Kenley. Give a guess. You’re gonna go with

Mark Kinsley: 98 Kenley.

I’m going 95. I’m going, I’m going dial up internet 90.

Adrienne Woods: Okay, Kinsley, one of you is right, so go ahead and get your like praise hand, you know. Sound ready to go. Okay. All right. Google was founded in 1998. Way to go,

Mark Kinsley: Eric.

Adrienne Woods: There you go. So this is from the actual Google website. It was officially launched in 98 by Larry Page and SEI Brynn.

Um, they were students at Stanford University in California and they developed a CIR algorithm, first known as Back Rub, and that was actually in 1996. And then Google was launched as the search engine in 98. Oh, I

Mark Kinsley: like that part of the trivia question. The original name was Back Rub. Back Rub. Do you,

Eric Grindley: do you remember Ask Gs.

Mark Kinsley: Oh yes, a hundred percent. Ask James. Yes I do. .

Eric Grindley: Oh man. Search engines were such a funny thing back then. Like, uh, oh my goodness. There were so many random ones. Well, it was

Adrienne Woods: such a brilliant idea too. Like everybody has their own butler J’s The Butler. . Something that was only available to the super wealthy is now in everyone’s home.

Eric Grindley: Yeah.

Mark Kinsley: Basically, again, for being on the show, Eric, and if anybody has a, a marketing tip that’s worked for you, an idea you want us to tackle, or if we can get you in touch with Eric, go to fam dot. Text us on our podium number. Be sure to subscribe to our newsletter and to the podcast on Apple and Spotify because we never want you to miss an idea, Adrian, that can make you a recession proof.

We’re just gonna say, you gonna say a back rubber ?

Eric Grindley: No,

Adrienne Woods: but that would’ve been good too. But recession proof.

Mark Kinsley: How about that? Join, join us each week as we bring you more fam, marketing magic.

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