During this time of economic uncertainty, many companies are starting to slash their marketing budgets. Conventional wisdom has it that consumers don’t spend money during a recession. So you shouldn’t market your product because no one is buying, right? We don’t agree. Consumer habits shift during an economic downturn, and your approach to marketing should as well. Let’s look at a couple of consumer behaviour myths that have been floating around and what they mean for influencer marketing.
Myth 1: Consumers are only motivated by price during a recession
Let’s look at the last global recession. Venture capitalist Benedict Evans recently tweeted an interesting graph of Google search trends. In it, you can see searches for the word “cheap” fall, while searches for the term “best” rise. The two lines meet in 2008. At a point when consumers arguably had the least amount of disposable income, they were simultaneously less interested in what was cheap, and more interested in what was best. And the “best” is still trending upwards.
This seems like an important chart. pic.twitter.com/rlWVKpNJOA
— Benedict Evans (@benedictevans) May 3, 2020
Slickdeals released the results of a survey they conducted on spending during this current downturn and found that consumer spending in the US has increased by 18% during stay-at-home restrictions. Along the same lines, McKinsey conducted a study following the 2008 recession and found that the way people perceive the value of products changes during an economic downturn. Their research primarily focused on premium and basic consumer packaged goods, but these findings apply to other categories.
Essentially, as consumers become more value-conscious, they have a greater need to be convinced of what a product can do before they open their wallets. In a stable economy, a product’s price impacts the perception of its value. Products that command premium prices typically are seen as more desirable.
But during a downturn, consumers are more open to considering non-premium products, as value trumps intangibles like brand perception. This means former loyalists may be willing to try — and even switch to — other brands, if another company can better meet their current needs. Brands with products of all price points should take this as an opportunity to reinforce the value their products offer. You want to retain your advocates or win over new customers.
When people are looking to understand the value of a product, they often turn to voices they trust. That’s where influencers come in. Consumers look to them to learn about new products or form opinions on existing ones. Whether you’re a premium or accessible brand, influencer marketing can be a cost-effective way to reinforce your product’s value to an engaged and receptive audience.
Case study: Dyson’s influencer marketing adds lift and bounce to the industry
First, let’s look at Revlon. Their One-Step Hair Dryer and Styler and One-Step Hair Dryer and Volumizer are YouTube favourites. These products have taken off online since launching a few years back. We didn’t detect disclosed Revlon-sponsored YouTube content, so the online conversation is almost entirely organic. Both products tout a reasonable price point ($35 and $50, respectively) and a pragmatic value proposition: Style and dry your hair in one step.
Dyson, on the other hand, is a premium brand that’s recently entered the haircare market. In 2018 it launched the Airwrap, a hairstyler that uses an innovative, air-enabled wand to curl hair without using extreme heat. To back up the price point (between $400 and $550), it emphasizes the novelty of the design and the science behind its unique technology. It also sponsored several YouTube creators to create videos promoting its launch and made a huge splash.
The products are not hugely different. Both Revlon and Dyson’s products dry hair. But the price point, messaging, and marketing strategies sit on opposite ends of the spectrum. Between October 2018 and April 2020, we found roughly 451 videos were released with tags related to Revlon One-Step products and Dyson Airwrap, by influencers with at least 5,000 followers. Here’s what we found:
1 . Sponsored content benefits the entire category.
You don’t need to spend to receive the benefits of sponsored content. We noticed something interesting when Airwrap launched, and content creators started publishing videos about the high-end hairstyling device: Others wanted to participate in the conversation. During Dyson’s marketing push, content creators also started discussing Revlon’s products. In fact, for two consecutive months in 2019, Revlon’s One-Step products received more views than Dyson’s Airwrap, despite being nearly four years old.
2 . Sponsored content keeps on giving.
The most popular video published during this time period clocked in at 4+ million views. Published just a month after the Airwrap’s launch, the video compared the Airwrap and Revlon’s One-Step products. A few weeks before, this creator participated in the October launch campaign. Her first video, which was sponsored, received ~800,000 views. To continue participating in the conversation, this creator published a second, organic, video that made a splash. Sponsored content can be beneficial not just to the creator’s bank account, but also help them discover new content that resonates with their audience.
Myth 2: Audiences don’t want to be marketed to right now.
Everything in our lives is changing as a result of COVID-19. Many marketers are concerned that they should stop spending on sponsored content because audiences won’t be receptive.
We looked at the data, and it just isn’t true. Audiences are still receptive to sponsored content. While some industries, like travel, may want to rethink their marketing strategy, there’s no need for other consumer brands to stop. Moreover, as some companies pause their influencer marketing activities, there’s a massive opportunity for brands to take advantage and cut through the noise.
We’ve developed a metric called the Matchmade Resonance Score (MRS), which measures how well, sponsored content performs as compared to non-sponsored content for a given channel. A score of 100 means that sponsored content performs as well as regular content for a given channel. Understanding performance is key; if an audience doesn’t respond well to sponsored content, then it doesn’t make sense for advertisers to work with them.
We analyzed 214,000 sponsored YouTube videos from US-based influencers with more than 10,000 followers between January and April of this year. Here’s what we found:
1 . There’s less sponsored content.
The amount of sponsored content produced decreased. We wanted to see if specific content categories suffered big drops because a channel can belong to more than one category. We found that Entertainment/Lifestyle channels are experiencing the biggest slump, as compared to solely Entertainment-focused channels. With the exception of Gaming/Lifestyle channels, there was less sponsored content across all categories in March-April. So the effects, though concentrated, seem to apply to most channel categories.
2 . Audiences still enjoy sponsored content.
Despite everything going on in the world, there were no significant changes to how well audiences respond to sponsored content. The distribution of sponsored videos across MRS categories between January–February and March–April is almost the same. If viewers were less receptive, we would have observed an increase in the number of videos that fall into MRS categories below 100. We did notice a decrease in the number of videos that fall into MRS category 50–100, but that seems more related to a drop in sponsored content than changing attitudes.
Does sponsored content guarantee that you’ll acquire more users right away? No. But during this time period, you have an opportunity to forge connections with new audiences that could benefit your brand in the long-term. While it may not result in an immediate purchase, creating a positive brand perception ultimately generates longer-term value than a one-off transaction.
Work with creators to show your audience what you want them to see
Governments are starting to lift restrictions so everyone can return to everyday life. However, it’s expected that the financial consequences of COVID-19 will linger. Consumers won’t stop spending entirely, but they will pay more attention to value when making a purchase. As some marketers completely stop their spending, others can seize the opportunity by connecting with new audiences through sponsored content, and by promoting value-forward messages.