When a recession comes along businesses and individuals face escalating interest rates and cost-of-living expenses. So most people protect their personal finances by drawing back on all non-essential expenditure.
And because businesses rely heavily on consumer responses to a fluctuating economy, they will often scale down marketing budgets as brands face cash flow issues.
Should you reduce your marketing and hope sales keep on coming? Or increase your marketing budget, bank on sales increasing, and use that revenue to pay for marketing?
When customer confidence drops, they tighten their belts and reduce their spending.
They may still use some of their disposable income, but only on brands they trust or perceive as valuable.
Someone working from home may cut down on their subscriptions but will maintain a daily $7 latte because it’s that smaller luxury that keeps them going every morning.
When people spend less and businesses cut costs, marketing and advertising budgets are often the first to go. It seems logical to the suits: keep outgoing costs low so they can keep the power on and remove the risk of layoffs. Simple, right?
Not so fast.
According to Harvard Business Review, this is the antithesis of what a business should do:
If your competitors are cutting back on their digital marketing, your space becomes less competitive. There are less businesses bidding on ads, bringing the cost per ad auction down.
Consider this, before a Recession a consumer would generally see three or four companies’ ads for the same product or service. But during a Recession their choice is narrowed down because they’re only seeing one or two brands. Therefore, your customer acquisition cost will be cheaper.
Data gathered by Total Retail found that the cost-per-click of Google Ads dropped dramatically in the earliest days of the COVID-19 pandemic. Retailers took immediate action to reduce their outgoings. Only later, when over-cautious businesses tried to get back in the game, they discovered that other savvy businesses had sustained their digital marketing and increased their market share, leaving the cautious at a disadvantage.
Same with search engine optimization, social media marketing, and video marketing.
Companies that reduced budgets or paused campaigns lost search rankings or were cannibalized by their competitors’ growing channels. In fact, Meta, Pinterest, Snap – all tech really – are predicting slow growth which means they’re anticipating big budget pull-backs on their networks.
Want to protect your marketing, survive any recession, and thrive?
The first thing to do is to recognize how your customers’ behaviors have changed. Then utilize your brand to bring a sense of reassurance and calm.
Recessions are unnerving – people need familiar brands they can trust.
How to do this? Use precise messaging tailored to your demographic. Discounts or offers on essentials can create goodwill and doesn’t cost a fortune to implement. Focus on the quality that sets your products or services apart. But whatever approach you take, make sure you’re addressing your target consumer group with an eye to expansion.
And it’s best to prepare. If you want to beat a Recession, it’s critical that you understand your customers’ shifting behaviors and desire for security and adapt your company’s response to shifting economic circumstances.
Be persistent. Keep on marketing. If you don’t, someone else will.
As Warren Buffet once said, “Attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Recessions come and go. But historically times of uncertainty become times of opportunity.
At GeistM, we are experts in analyzing user behavior, creating content that builds trust, and targeting the right customers with the right messaging. Contact us to find out how we can help your brand succeed in these uncertain times.
Remember, with the proper preparation and strategies, any business can weather the storm.