October 9, 2022
We’re on a global political and economic roller coaster with no end in sight. War, high energy prices, inflation, shifting consumer and advertiser behaviors–these are plummeting valuations and hurtling us towards a recession. As Sequoia mentioned in a recent presentation: the days of cheap capital are over.
Elsewhere, Meta, Google, and Snap have hiring freezes and are hinting at lay-offs. Crypto big bets Ethereum and Bitcoin are in freefall. And Poshmark, lauded as a profitable unicorn whose stock popped 142% on its IPO day last year, has just been bought by Naver for half its original valuation.
But there is hope! This article is part history lesson, part strategic advice. Because in the last three decades, we’ve had three economic downturns, and from each one, we have learned this:
You cannot pause your brand. But it can help you get through the downturn.
Many of the global brand powerhouses today were born out of economic crises. Microsoft came to be during the recession of 1973, LinkedIn started in 2002 after the dot com bust, and Airbnb launched during the recession of 2008. These are all companies that have heavily invested in brand building and used it to make challenging decisions, have sharper value propositions, and build strong communities.
Let’s take Airbnb. In 2014, when Airbnb landed on “creating a world where everyone can belong anywhere” as the overall brand mission and driver of the company experience, CEO Brian Chesky was able to quickly cut 25% of all projects because they were not furthering the mission, freeing up resources and capital. That same brand mission helped the company navigate a challenging 2020, where according to their CFO David Stephenson, the company shifted to being more brand marketing driven and less reliant on growth marketing to drive sales and customer engagement. They have publicly reiterated their commitment to brand being a driver of their success since making the move in 2019.
And Nielsen agrees with this approach. A 2021 study, commissioned by Google, showed that brands that added upper-funnel marketing efforts to existing mid-funnel campaigns were able to boost ROI by 70%. And those that added upper-funnel tactics to campaigns that covered the mid and lower funnel were able to boost ROI by 13%.
At a time of volatile valuations, a clearly articulated brand provides stability to stakeholder confidence both internally and externally. So what lessons will help brand leaders navigate the uncertainties today?
The decisive variable in leaders’ ability to meet the moment is less about category and more about clarity of vision and purpose. Without the latter, tech leaders will struggle to adapt with confidence.
Cost-cutting is an important tactic–but it’s not a strategy. That requires reprioritization and long-term vision, which a clear brand helps with so leaders can make difficult decisions quickly or risk hemorrhaging value and morale.
Declining capital leads to declining confidence, so keeping your best talent motivated and loyal is harder in the context of plummeting stock options and delayed IPOs. Leaning authentically into purpose and values is a proven way for leaders to build a convicted, missionary mindset and quell employee unrest.
The “double down on your current brand and spend your way out of the recession” line of advice is too dangerous. Some brands are born recession-ready, but most need to evolve. But if these pivots play both strategic offense and tactical defense, then the results can be spectacular.
In times of scarcity, it’s easy to see your customer as a unit on a spreadsheet. But they are the communities that support and fuel your brand. While it’s important to have a smart growth strategy, it’s also crucial to invest in your user communities without exploiting them.
Brand strategy ultimately boils down to answering these big questions:
1. Product-market fit: Is your value proposition reflecting the evolution of the category?
2. Purpose-culture fit: Is your purpose still relevant to the most urgent tensions?
3. Positioning-community fit: Is your brand justifying its place in people’s wallets?
If the answer is no, it’s time to take action. And we’re here to help! Please reach out to us at firstname.lastname@example.org if you have any questions or thoughts.