Smart Marketing: Why you shouldn’t cut marketing expenses during a recession

Interest rates are rising, which means consumer spending is going down. Inflation has stretched many household budgets and as a result, many companies are looking to cut their expenses to align with shifting consumer habits.

If you’re wondering whether cutting your marketing spend to ride out the economic downturn is the right move, it can actually do more harm than good. When you stop marketing yourself, how will customers find you? 

And what’s the number one way to generate sales? Be seen by the right people, at the right place, and at the right time – this is what marketing is. Even if the customer isn’t at the purchase phase, marketing ensures your product or service is front of mind when they are.

Research shows that companies who focus on pivoting their marketing strategy rather than slashing it achieve greater performance, even during a recession. If past recessions have taught us anything, brand visibility can grow 3.5 times more for companies that maintain their marketing output.

So before you hit pause on those Google Ad campaigns, think about how you can realign your marketing budget to work smarter for you. 

Keep calm and invest in marketing: 3 reasons why you shouldn’t decrease your marketing spending.

1. Marketing is a non-negotiable

The unfortunate reality is many people see marketing as a nice to have rather than a necessity. So during times of uncertainty, it’s usually the first expense to go.

This attitude is the exact opposite of what you should have. Every business needs some form of marketing to be noticed online.

You could have the best product or service in the world but it wouldn’t matter if no one knows it exists. Marketing is vital to success – it gets the word out. 

2. In it for a long time, not a good time

“Rome wasn’t built in a day, and neither is your brand.” – Stephen Houraghan

Brands take time to build – consistent marketing is one of the key drivers of sustainable branding. Brand strategy should be maintained during downturns, to capitalise on growth when the economy recovers.

3. It gives you insights into your customer

When the going gets tough, you learn a lot about your customer and how your product or service can be improved to provide more value. Getting to know your customers allows you to develop deeper relationships and in turn deliver more tailored consumer experiences. 

Smarter Marketing: ‘turning adversity into advantage’

If you’re looking to decrease brand loyalty and awareness and open the door for other competitors, then go ahead and cut those campaigns. But, if your goal is to market smarter by adapting your approach, here are some ways you can do just that:

1. Don’t reduce your budget, realign it

2. Change your messaging

3. Focus on long-term branding vs. short-term.

4. Leverage current market opportunities.

5. Lean on your current customers (rather than trying to attract new ones).

1. Do not reduce your budget, realign it

Google ads, social ads, and influencer marketing are high-converting channels to get your brand in front of your audience quickly. However, these options don’t offer long-term or sustainable results.

When doubts arise, it’s time to go back to basics and in this case, good old-fashioned blogging. Blog content only takes a relatively small amount of your time and money with the potential for high returns if you do so organically. More than anything else, keeping up with editorial efforts will ensure that you are continually building your reputation and engaging your followers when they need it most.

Looking back to less than three years ago, when the world faced so much uncertainty, many turned to online content marketing. Many businesses offered free or low-cost digital products and services to assist those suddenly working and schooling from home.

These activities reinforce a deeper connection between business and consumer, so when the dust settles, those genuinely helpful companies will remain at the forefront of consumers’ minds.

2. Change your messaging

Any shift in consumer behaviour should ultimately affect your strategy regardless of economic activity. As consumers become more conscious, look at how your product or service can better meet your customers’ needs. After all, your customer might not be looking to acquire more stuff but rather be more intentional with what they consume.

Perhaps you work in the construction industry focusing on luxury renovations. Take the opportunity to educate your audience on how they can save money with their renovation. For example, where they can cut costs, what rooms people can focus on to increase the value of their home or if there are any budget brands that can serve as a dupe for a more expensive option.

3. Focus on long-term vs short-term branding

We’re not saying you should ditch your short-term strategy. Part of a well-rounded strategy encompasses efforts that allow you to achieve quick wins in the short term. 

These short-term strategies include sales, PPC (pay-per-click) advertising and influencer marketing. The results from these tactics can be seen almost immediately, so can prove valuable when meeting goals right around the corner. 

The opposite end of the spectrum involves long-term marketing strategy – the big-picture goals for your business. It can include content marketing, SEO, social media and database marketing. 

Working toward long-term goals allows you to focus on building a community around your brand and creating value for your customers. With a long-term strategy, if you temporarily pause your efforts, there won’t be a sudden drop in results.

4. Leverage current market conditions

In an economic downturn, there’s at least one upside, competitors facing financial strain will likely decrease or pull the pin entirely on their marketing activities. This puts you at an advantage – less competition means more visibility. Better yet, you can do it more often with less budget.

“With reduced media advertising costs (advertising expenditure dropped by 13% during the last recessions), marketers can now buy more advertising with less money” (ICAEW Insights, 2022).

What does this mean for you? Your CPC might decrease and impression share may rise if competitors pause their paid campaigns. You’re growing more organically since other players aren’t optimising online content. Your email campaigns are converting higher than ever before since there is less consideration between your brand and others.

5. Lean on your current customer base

Investing in new customers is between 5 and 25 times more expensive than retaining existing ones.

This can seem obvious but many businesses are so focused on acquiring new customers, they forget they already have existing customers they can lean on. Not only is this an easy win, but with a little extra attention, repeat customers can easily become brand advocates for your product or service.

If you use any kind of CRM or database software, you’re already one step there. These tools can provide powerful insights into your customers and allow you to personalise the way in which you interact with each customer. We are not talking about direct sales, such as discounts or promotions, but content that keeps them coming back for more.

If you have any relevant updates to share or valuable tips and tricks related to your business, share them and share them often. Either through email communication or social media. Sharing through social media is also a great way to start a community around your brand and open up more two-way conversations.

Need assistance realigning your marketing strategy? Or maybe you’ve always wanted to invest time into content marketing, but are unsure where to start. We’ve got the tool and the know-how to develop a comprehensive plan to get you growing online. Reach out to one of our brand and marketing specialists.