The past few years have been a rollercoaster ride with the world facing several challenges, including a prolonged two-year pandemic that continues to wreak havoc in many parts of the world even today, a trade war between the world’s biggest economies, bushfires and tsunamis caused due to climate change and raging wars. As such, many businesses perished. However, many survived and many saw unprecedented growth.
Today, the business landscape is threatened by an impending global economic slowdown and looming recession. According to the World Bank, global economic growth is set to decline from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023.
The startup world in Southeast Asia is not unaffected by these global events. The region’s largest ride-hailing and food delivery startup Grab and eCommerce giant Sea Limited are reportedly witnessing considerable drops in stocks of both companies listed in the US, down 65% year-to-date.
Why Malaysia’s ecommerce industry will remain strong in the coming recession
We are already seeing a slowdown in new business over the last few months with startups reducing marketing spend or putting a complete halt on growth. This bears some resemblance to the start of the pandemic, as businesses start to realise that a recession is inevitable.
However, against all odds, venture capitalists are still active and betting on Southeast Asian startups and the region is brimming with funding opportunities for businesses with the right approach, which means there is still scope for growth and scalability during a recession but how? Businesses that have survived all the challenges in the past few years and even managed to scale and grow- what did they do differently?
Lessons from the past: Surviving a crisis by leveraging marketing and growth
During a crisis, it is a natural tendency to reduce as much risk as possible. Startup founders and entrepreneurs try to counterbalance the uncertainty and unpredictability of the economic environment, in which their businesses operate by trying to remove variables under their control. To cut down on expenses and ensure some financial stability, businesses look for expendables, and more often than not, startups decide to cut down on marketing.
As someone who has worked with hundreds of clients in the past fifteen-odd years in the industry, I can say with confidence that cutting down on marketing during a time of crisis can prove fatal to your business. There is over 100 years’ worth of indicators that all point to one common conclusion: During an economic crisis, rather than cutting down on marketing, businesses should instead double down on marketing and advertising.
Case in point: based on a 1927 Harvard Business Review report, businesses that continued investments in branding and marketing through the Great Depression came out around 20 percent ahead of how they went into the recession. Buchen Advertising Inc. found companies that cut down on advertising and marketing during the 1949, 1954, 1958 and 1961 recessions, lagged in sales and profits behind those that did not. In 1980, McGraw Hill Research studied around 600 B2B companies and found that those that doubled down on building their brand and advertising grew by over 275% more than those that did not. Yet another study by Cahners Publishing Company found that marketing and advertising during a recession lead to a 1.5x increase in market share on an average.
Finally, most recently, during the COVID-19 pandemic, there was a dramatic shift towards digital marketing. Businesses that quickly pivoted, ramped up and continued marketing, as well as advertising, saw unprecedented growth even during the pandemic.
For example, American financial services and digital payments company Square ramped up its efforts and pivoted towards user-generated content campaigns. The company saw an 82% surge in prospective customer web traffic year over year and boosted time spent on its campaign landing page by over 3X. In another strategic marketing effort, Hyatt leveraged first-party data to launch more personalized branding experiences and was able to reach 13X more customers in 2020.
Closer to home, eCommerce giant Lazada managed to hit impressive milestones in 2021, and saw remarkable profits, site traffic and a record number of orders and new sellers on the platform. The company attributes community-centric marketing activities as one of the key drivers of its increased engagement and growth. In fact, Adobe found that by 2020, over 80 per cent of businesses in countries like India and China were likely to have a dedicated COVID-19 taskforce to manage brand messaging and campaigns.
In short, your customers will forget you when you don’t put yourselves out there and continue to build your brand. It isn’t possible to pick up right where you left off after months of inactivity or limited marketing, so your competitors leap ahead of you in mind share, sales, lead generation and more.
Startups and SMEs in Southeast Asia need to brace themselves for the recession
It is clear that rather than cutting down on marketing and PR efforts, businesses should actually focus on developing brand strategies that help them stand out and engage existing plus attract new customers during any time of crisis. This isn’t the first time I’ve shared my thoughts on this issue, but it seems that the lessons learned in the last couple of years haven’t quite sunk in yet.
However, there is no denying the fact that the recession is on its way in Southeast Asia and it is likely that startups and SMEs will feel the brunt of it with many industries still recovering from the pandemic. Having said that, startups slashing marketing budgets is not the solution – this only succeeds in stalling growth and revenue flow. During this period, competition lessens, so investing in marketing should be a keen focus for businesses to stand out and grow where others aren’t.
Companies should look at building a pipeline to maintain cash flow for survival and growth. Cash flow is king and crucial for any business’s survival. Hence, boosting sales during a time of crisis should be the main goal. This is where marketing and PR activities can come in handy. Creative and accurate messaging during a recession can not only increase profitability through greater sales volume but might also improve reputation and customer relations if done correctly.
As long as there is a need for the solutions and products you offer, you have a customer base that you can sell to. The business landscape is changing rapidly. PR, marketing and advertising trends are evolving to keep up. For any company- big or small- today, it has become crucial to have a continued conversation with customers through various digital touchpoints, and this is where marketing comes into play. This becomes even more pertinent in a time of crisis. So, for startups and small businesses in Southeast Asia, it is important to invest in marketing as they brace themselves for the impending recession.
This article was contributed by Terng Shing Chen, CEO and Founder of SYNC PR
About the author
Terng Shing is the Founder and CEO of SYNC PR, a PR and content marketing startup that uses technology to reduce time wasting and administrative tasks in delivering results. Based in Singapore, Terng Shing has been focused on helping startups and SMEs build their brand story through media and content. Since 2018, SYNC has worked with over 300 startups, SMEs and MNCs to help them scale their business in Southeast Asia and beyond.
His experience includes a decade of work in PR and communications agencies, managing top-tier fortune 500 companies to the leading startups in Southeast Asia. Terng Shing has a passion for innovative communications and is convinced that PR is the next great industry to see positive disruption.
Terng is also the co-host of popular business podcast Business over Drinks and co-founder of travel platform Travel Wanderlust.