Read anything in the news about the economy lately? (If you’re reading this around September 2022, it’s not doing too well.)
In fact, economists have forecasted a 20% chance that the country will fall into a recession next year. Even if it doesn’t, economic growth is projected to slow in the coming two years, with unemployment and inflation rates rising. In the wake of the 2020 recession spurred by the COVID-19 pandemic, this isn’t the news we want to hear.
With such a gloomy outlook, businesses might be tempted to cut costs, especially on marketing and advertising spend. However, continuing marketing efforts during an economic downturn is one of the most important things businesses can do if they want to stay relevant and consider their long term market share.
Continued Marketing during a Recession is beneficial
Research shows that companies that approached a recession as an opportunity to increase their marketing efforts have benefited greatly and experienced growth.
First, increased marketing helps companies stay in the forefront of consumers’ minds. This matters because once consumers recover and are ready to spend again, they will intuitively turn toward the brands they are most aware of.
Further, increased presence, online and offline, displays strength and stability as a brand, and this show of strength is what consumers are looking for during uncertain times. Even if a company might be struggling and isn’t doing as well as it used to, they should focus on how to maintain and cultivate stability for their customers.
Finally, cutting down on marketing and advertising efforts might leave a chance for competitors to waltz right in and fill the gap.
So how can businesses market smartly and responsibly during an economic downturn?
3 Ways to Market responsibly during a Recession
Return-on-investment (ROI) marketing is a smart strategy to turn to during a recession, since it considers the long-term effects of certain marketing efforts. Here are 3 tactics marketers should consider using to market smartly and responsibly during hard times.
1. Long-term brand building:
During a recession, consumers might not be so eager to spend as much as they used to. Because demand can be so low (or in some cases even ceases to exist), concentrating on sales conversions or short-term activation makes less sense.
In contrast, leaning on consistent brand building and awareness proves effective in retaining customer loyalty and increasing relevancy. Think of branding as an asset to invest in.
Luckily, branding doesn’t always come at a high cost. Good marketers know that branding can be achieved through a variety of channels, including advertisements, blog posts, newsletters, e-mails and more.
Although client conversion might take a back seat, branding will surely capture consumers’ attention if executed well. By building meaningful relationships and establishing a sense of trust in a brand, companies can still experience success during hard times.
2. Consider your customers:
During a recession, consumers’ spirits might be low and their pockets more empty than usual. It is therefore essential to cater to their needs, both in how you communicate to them and what products you offer.
Appealing to consumers’ emotions at a time of distress is an effective way to engage them. Striking a compassionate yet proactive tone proves to be a more profitable approach in the long-run than purely transactional messaging.
Moreover, companies that historically profited during recessions reassessed what exactly their customer-base could afford and adjusted their products to be more accessible.
For example, in 2009 during the GFC, MailChimp made a decision to change its service offers and customer base. From previously only appealing to large corporate clients with yearly retainers, the company decided to add a freemium business, and within the year its number of subscriptions increased from 85,000 to 450,000.
Being socially responsible by considering your customers’ needs and circumstances goes a long way in winning them over in the short and long-term.
3. Reallocate your budget:
It isn’t always necessary to cut spending on marketing during a recession or economic downturn. However, it is important to pay attention to what channels are performing well, and redirect more funds toward them.
For example: if, pre-recession, a company only allocated 14% of its budget toward branding, it could consider reallocating some money from other departments. Knowing now that branding should take a front seat during an economic downturn, a business could decide to redirect more of the budget toward branding and less toward sales conversions.
Further, companies should watch out for wastefulness and zero-in on increased efficiency. Reviewing every channel and assessing how much is being spent, and on what, opens up possibilities to make tactical optimisations and spend more smartly.
Final Thoughts
It isn’t easy for anybody to move through a recession and get to the other side unscathed. However, companies shouldn’t panic or crack under the pressure to stop spending on their marketing campaigns.
Rather, a calculated approach is needed to optimise spending and appeal to customers’ needs. Companies have experienced wild success during recessions, and they did so because they were innovative and flexible.
Instead of viewing a recession as a revenue killer, businesses who took a proactive approach in a time of uncertainty turned out on top.
So the next time you’re considering cutting your marketing budget, think again and remember that even during tough times, anything is possible.