We’ve all heard the bleak predictions: An economic downturn (potentially in the form of a “recession”) is looming. That fact understandably has organizations and their marketing departments a little on edge.
“Should we continue our marketing initiatives? Scale them back? Stop marketing altogether?” These types of questions are being asked in meetings all around the country today. And the answers are more important than ever as organizations make decisions about their marketing budgets.
The idea of cutting back on marketing expenditures has some powerful initial appeal. But when you step back and look at how companies have fared in past downturns, the results show that a knee-jerk reaction isn’t in your company’s best interests.
Wondering About Marketing During a Recession?
Let’s time travel!
You don’t have to go far back to find examples of companies choosing to “stay the course” on their marketing and being rewarded for that decision. As recently as 2020 and 2021, organizations that stayed in touch with their target markets during the pandemic were appreciated for helping to maintain some sense of normalcy during an uncertain and stressful time. And they’ve come out of that period with enhanced customer loyalty and rapidly expanding customer bases.
There are other instances of companies coming out ahead by continuing their marketing initiatives during a downturn. They include a prime example from the most significant financial event in U.S. history: the Great Depression. Cereal-makers Post and Kellogg were battling for market share when the economy imploded. Post “played it safe,” cutting back significantly on its marketing expenses. On the other hand, Kellogg doubled its marketing spend and even launched a new product (Rice Krispies). The results? Kellogg increased its profits by 33% in the years that followed and remains the industry leader today.
The recessions in the early 1980s and 1990s produced similar success stories. One survey of 600 companies by McGraw-Hill following the 1980-81 recession found that businesses that continued to market their products and services experienced 256% growth compared to those that cut their marketing budgets.
What’s more, market measurement firm Nielsen says that it takes up to five years for companies that halt their marketing to regain lost brand equity and that long-term revenue can be down by 2% for every quarter a company refrained from advertising. So, the thought that “We’ll lay low for a bit and then hit the ground running after the downturn” is misguided at best and can be financially devastating.
Modifying Your Marketing Strategy in Rhythm With Economic Changes
To be sure, ignoring the souring economic climate and continuing your marketing as if nothing has happened can also cause problems for your company. The path to continued success is paved with carefully considered shifts in your messaging, media spending, etc. In other words, you shouldn’t stop engaging with your target audience, but you should engage with them differently.
For example, let’s say your primary pitch during good economic times is that your product is more advanced than your competitors’ offerings. As the economy takes a turn for the worse, you might focus more on the value or durability of your products—issues that matter to consumers who are increasingly guarded with their spending.
Make the Most of Your Marketing:
How To Prepare for a Recession
The good news about prepping for a recession is that your actions benefit your business even if the event is less severe than expected or never materializes.
We recommend you take these five steps:
- Look back at your results during previous downturns and determine what worked and what didn’t.
- Position your business to assess current results quickly and accurately so that you can be agile in responding. For example, are you prepared for GA4—what Google calls “the next generation of Analytics”? The time to dive into GA4 is not when you’re struggling to respond to an economic downturn!
- Review your marketing messaging, branding, tactics, website, etc., to determine if you should refresh them. Then, address any issues you find promptly.
- Review your company’s mission. Do your values and brand align? If not, now’s the time to bring them back into sync.
- Revisit your market research. Understanding your audience is always important, but it’s essential to have the latest “intel” on your audience before and during an economic downturn.
Those Who Hesitate…
There’s a proverb saying that those who hesitate are “lost.” For companies, that loss can be in brand awareness, consumer confidence, revenue, and market share. On the other hand, businesses that take decisive action to fine-tune their marketing strategies invariably improve their results during the event. They also can capitalize on strong forward momentum when the economy rebounds.
As a marketing agency with a long history of helping clients not just survive but thrive in the face of economic challenges, we can do the same for your organization.