The Markets in Motion Study:
What Every CMO Needs to Know to Make Marketing Decisions During The Covid-19 Recession

By David J. Reibstein, Stephen Diorio, and Raghu Iyengar

Marketers are in the midst of a unique pandemic induced recession. For many, it is their first as a business leader. The decisions they make during this recession have major and immediate implications for their future profits, competitiveness, and careers.

This study is designed to help CMOs learn from the past and make the best possible decisions about where, how, and when to invest to maximize firm revenues, profits, and share. A team of experts from The Wharton School examined how business leaders should adapt to the current recession in the context of history, known academic research, and a survey of 352 CMOs to understand the actions growth leaders are taking today in the wake of the Covid-19 recession.

This in-depth analysis of academic, business, and primary market research has two clear recommendations to business leaders:

1. Increase investing in marketing and innovation during the recession if you can. While conventional wisdom and current management behavior suggest cutting discretionary spending on marketing and innovation in the face of shrinking demand is the accepted course of action, historical facts suggest otherwise. At a time when 66% of businesses have cut spending on marketing and innovation, there is no evidence cutting spending in a recession improved profits, growth, or share in the short or long term. In fact, our analysis strongly indicates that investing during a recession is a smart and valuable investment, particularly through the lens of growing profits, share, and firm value. Yet, 10% of today’s CMOs told us they plan to increase growth investment during the recession.

2. If not, anticipate and prepare for significant changes. Another lesson is that business leaders should not expect a return to the status quo in the recovery. The facts show that recessions significantly restructure markets and only a fraction (under 10%) thrive in the following years. Many of the changes in customer behavior, sales force engagement, and general business models are not temporary but may lead to a fundamental change in behavior. A third of CMOs believe their go-to-market model will change forever as a direct result of this recession.

Marketing leaders have limited time or resources to make the difficult resource allocation and investment decisions they must make in the coming year. With planning for the 2021 fiscal year just months away. The decisions business leaders make about where to cut, invest, and refocus their growth resources will disproportionately define their future profitability and competitiveness in the new buying reality. With a reduced and, in many cases, negative cash flow it is hard to garner internal support for spending during the downturn. That said, the historical evidence is clear, the return per dollar spent may never be greater than what can be gained by spending at this time. This is important for both the short-term as well as the long-term. New leaders will be determined today that will persist into the future. The future of the business will be determined by how one spends in the present.