Invest in Brand Preference Now to Handle Coming Inflation, Says Pace

“This is a great time to be a marketer,” says Tony Pace, President/CEO of MASB, the Marketing Accountability Standards Board, “because brand preference is on sale.”

In a recent interview on the Wharton School podcast Markets in Motion, co-hosted by David Reibstein and Raghu Iyengar, Pace was asked for his perspective on how the Covid-19 pandemic has affected various industries in terms of their advertising and communications spending and also how it’s affected the sales organization.

“The whole notion that a recession was coming, caused by a virus for which we didn’t know the outcome, led to an awful lot of people just pulling the emergency brake on their spending and stopping anything that they could. Any piece of spending that wasn’t contractually committed, they just said, ‘I’m not going to do that.’

“I understand the human side of that, but in my estimation it was an overreaction. As we all know, it’s a lot easier to look at marketing spending as variable spending versus fixed spending. I think that was to the detriment of a lot of businesses. There is a lot of research indicating that spending during a recession actually sets you up for a better outcome once you come out of the recession. It’s easy to have that conversation when you’re dealing with a ‘typical’ recession, but when you’re dealing with the virus and the pandemic and what’s going to happen and how long that’s going to be, that’s a hard conversation.”

For brands, Pace, the former CMO of Subway Restaurants, sees challenges and opportunities on the horizon.

“The Fed has changed their policy. They’re now willing to accept inflation above 2 percent. When you hear that, and you also see that the dollar is weakening aggressively and commodity prices start to go up because of that, you know that’s going to lead to price inflation at some point. So you’re saying, ‘Wait a minute. I’m trying to get customers to come back in and I’m going to have to deal with prices going up? How do I set up that situation?’ Well, you’d better be supporting your brand now. You have to have brand affinity in place before those kind of circumstances play out in the marketplace.

“This is a great time to be a marketer, because brand preference is on sale. You can drive brand preference for substantially less than you could a couple months ago, because all of these costs are going down. It certainly takes courage and fortitude to do it when every resource is being constrained, but if you’re really thinking in the long term and acting in the long term, you’re thinking, ‘I can get changes now that I might never have achieved.’

“When can you build new habits?” says Pace. “When the old habits are changing!”

For more, check out the MASB Channel playlist: Marketing During the Pandemic.