In response to the recent economic downturn, businesses everywhere are tightening their belts. One may wonder whether they should continue marketing their business on a shoestring budget, but they would not be the first to face this challenge.
In the 1920s, Post was the leading breakfast cereal maker. However, the company responded to declining revenue by slashing its marketing budget. Kellogg’s, on the other hand, doubled its ad spend. After the Great Depression, Post’s revenue kept falling, while its rival’s profits soared by over 30%. A century later, Kellogg’s is still at the head of the pack.
“This case study is not unique,” says Fulya Uygun, co-founder of digital marketing agency Bowery Boost. “In fact, over 100 years of data reveal that cutting advertising during an economic downturn leads to prolonged hardship for businesses. On the bright side, companies that continue marketing tend to come out of a recession even stronger than before.”
While cutting marketing saves money in the short term, it is likely to have long-term negative results. As Uygun explains, promoting a brand is critical during a recession. Here, she outlines ways for brands to reallocate funds and make the most of every dollar.
Why should you continue marketing during a recession?
“Consumers may not be buying much now, but as a business owner, you need to keep the big picture in mind,” says Uygun. “The economy’s ups and downs are cyclical. If you maintain the relationships you have with your customers, they will turn to you once they are able to spending confidently again.”
Continuing to market despite economic upheaval projects stability. Now, more than ever, customers want to see strength, certainty, and leadership from the brands they purchase from. If a brand reduces their marketing efforts during the coming months, this will allow competitors to fill the void they have left in the market, and take advantage of their absence.
Reallocating your marketing budget during an economic downturn
Before the Covid-19 pandemic, 19% of US consumers claimed their incomes were already too limited to support expenses. With inflation making incomes feel smaller each day, it’s more important than ever to stay in touch with customers. As their priorities shift, brands will need to reach out in different ways.
“First, take a hard look at the products or services you provide,” Uygun says. “Believe it or not, some companies actually thrive during economic downturns. Your ability to sink or swim may depend mainly on what you are offering.”
No matter how hard things get, brands will always be in business if their company sells necessities. On the other hand, if a brand deals in luxury goods or services, it may be time for them to re-assess their lineup.
“Brainstorm ways to market more of the essential items your customers find relevant,” adds Uygun. “Dig into key performance indicators and marketing analytics to determine which products and campaigns are yielding results, and which are underperforming. Prioritize the products and advertising campaigns that are working and put the ones that are no longer effective on the back burner. A data-driven approach enables you to save money and boost your revenue simultaneously.”
During any period of economic downswings, brands must focus their marketing to adapt to changing customer needs and attitudes. With tight budgets, there is no money to waste on marketing that does not reach its intended niche, but remember that consumers’ spending habits are changing right alongside the economy. As such, brands should keep track of what their consumers need and retarget their marketing as needed, such as reworking their email and newsletter lists to reflect new segments in their customer base.
Making the most of your marketing during a recession
Marketing during a recession is no easy task, but there are a few tips that will enable brands to make the most of their budget. Keep the focus on existing customers, consistent branding, and positive messaging.
“Your loyal customer base is one of your most valuable assets when times are tough,” explains Uygun. “They are the customers making repeat purchases and recommending you to others. In addition, marketing to existing customers is easier and far more affordable than reaching new prospects. Research finds that attracting new customers costs five times more than retaining the customers you already have, so make sure your existing customer base feels appreciated through personalized emails, special offers, and frequent contact.”
Consistent branding has always been essential. During a recession, however, it has an even deeper and more significant impact. Other brands have pulled their advertising to reduce spending. With the noise turned down, their competitors’ message will be heard loud and clear. Keeping their branding consistent will optimize every ad they place.
“Finally,” says Uygun, “you will make your marketing budget go further by keeping your message upbeat. You probably feel doubt, frustration, and anxiety, but that cannot show in your marketing. Try to empower your customers with the content you post and the ads you create.” After analyzing nearly 900 case studies, World Advertising Research Center revealed that marketing focused on emotional engagement between brands and customers is even more profitable than special offers or discounts.
Marketing during the coming months will be challenging, but hard times offer opportunity. Demonstrating positivity, strength, and stability will enable brands to deepen relationships with existing customers. By forging ahead and continuing to promote themselves, brands can rise above competitors who are leaving the scene.