A recession is looming, and many marketers, budget holders, and C-suite leaders may reach for a familiar playbook: cutting advertising budgets and laying off marketing staff to protect margins.
That is understandable; public and private companies alike will be under additional scrutiny should a recession present itself. CFOs want to preserve profits while keeping their acquisition costs down and EBITDA stable.
Cutting your marketing spend may seem like the most logical course of action to take. But stop for a moment, and think, "What will my competition do?"
The answer is the same thing you are considering—cut marketing budgets.
What if you dared to do the opposite?
What if you presented a model to your CEO and CFO, or your business partner, or your spouse with whom you co-own a business, and bucked the trend, aiming to gain market share instead?
Increasing advertising spend or launching a new product during a recession can boost margins and drive revenue, studies have found, allowing a firm to increase its profile as competitors decrease communication. Companies that increase their marketing spend during a recession gain market share three times faster after the downturn.
It's true that depending on your business you might have to slash your spend dramatically. That's OK. There are still opportunities to invest in organic marketing channels so you are positioned well when the recovery inevitably comes around.
Here are four steps marketers and business owners can take to drive growth and enhance marketing at any appetite level.
1. Familiarize yourself with the data
Organizations tend to pull back on marketing spend during a recession. But data suggests that is often the wrong strategy.
Increasing media investment during a recession drives 17% growth in incremental sales, whereas brands that cut spend lose an average of 18% in incremental sales, according to research by Analytic Partners. Plus, marketing during a recession can make each dollar go further as demand for media declines. Some 54% of brands reported ROI improvements during the Great Recession.
Similar dynamics play out in the R&D department. For example, Sony cut R&D spending 12% during the 2000 downturn and then tried to regain momentum during the boom afterward. But bolder competitors such as Amazon and Microsoft eclipsed Sony, which never quite recovered. R&D investments are "more effective in economic downturns," researchers found, likely because the market is less crowded and organizations are likely to be shrewd about which products they back during a recession.
Marketing leaders who want to boost spend during a recession might seem like mavericks. But marketing history suggests their position is sound. By drawing on data that shows "decreases in advertising during a recession are not associated with any increase in profits," and "during a recession, increases in market share are larger as advertising increases," marketers can make the case for boosting spend.
2. Understand your audiences, and meet them where they are
Budgets are always tight in marketing, and during any recessionary period you'll need to be even more precise in your communication with customers.
Crafting an efficient marketing plan begins with figuring out where your customers are, which tactics are driving their attention, what is top of mind, and how to speak to your customers while being sensitive to their concerns. Instead of carefree messaging fit for the bygone bull market, bring considered optimism and empathy for struggles with inflation and other economic pressures to the table.
Double-down on the tools and messages required to gain your audience's attention and trust. If your audience is flocking to Connected TV, take out a moving ad spot on that large-screen storytelling medium. If you note organic audience growth thanks to your latest batch of branded content, don't abandon your long-term brand marketing efforts.
Embrace a calibrated mix that blends brand storytelling with performance channels to drive conversions.
3. Capitalize on cheaper costs and a less crowded environment
Advertising during a recession is more cost-effective because many of your competitors will cut ad spend. As demand drops, the cost of ad space and ad properties decreases, allowing you to reach—at less cost—the customers who matter. Fewer competitors in the market means you can more easily stand out and steal market share.
Use the recession as an opportunity to test channels in high demand, such as CTV; stand up digital campaigns with minimal costs; experiment with greater agility; and drive traffic to your website to boost conversions.
4. Double-down on long-term strategies
Organic tactics such as SEO and content marketing make strong recession investments, in part because they take 12-18 months to build audiences and drive returns. Marketers who abandon those programs now will be behind when recovery picks up steam. Those who maintain investments will see greater returns as the economy kicks back into full swing.
Marketers can make targeted organic investments by performing audience research. Understand what your prospects are searching for—as well as the keywords that will help you reach them organically—and tailor content to their needs. Your audience will build, and when your customers are ready to spend, you'll benefit.
* * *
As for marketing as a whole, the winners of a potential downturn will be those who make data-driven decisions and play the long game. Show up for your customers. When the time is right, they will show up for you.
More Resources on Growth During a Recession
B2B Brands: Five Marketing Strategies to Come Out of the Recession Strong
How to Stay Relevant at Your Marketing Organization During a Recession: Christina Del Villar on Marketing Smarts [Podcast]
The Definitive Guide to Business-to-Business Marketing in a Recession
Enter your email address to keep reading ...
Marketing Strategy Articles
You may like these other MarketingProfs articles related to Marketing Strategy:
- Digging in the Wrong Place: Misunderstanding Where SaaS Growth Comes From (Article 1 of 3)
- A Guide to Growth Hacking for Small Businesses [Infographic]
- How to Market Your Agency During a Recession
- The New Customer Journey: How to Reach B2B Buyers in 2023
- In the Age of Automation, Focus on Strategy: Agency Best-Practices
- B2B Influencer Marketing—The Good, the Bad, and the Ugly: Mike Allton on Marketing Smarts [Podcast]