What happens to marketing in a recession?
Let’s start with the bad news.
It’s official. A recession is coming. And according to the Bank of England, it could be the longest in recorded history. There’s a chance it may extend well into 2024.
Oh dear. Can there be any good news after that?
Yes, there is - even if your job is to grow a business.
Not every company shrinks during a recession. Knowing what’s coming and the right moves to make can present an opportunity to increase your brand awareness, build customer loyalty, and increase sales.
Here’s a look at what happens to marketing during a recession and how you can use this economic downturn to your advantage.
ROI pressure will increase
Marketers are constantly pressured to justify their budgets and maximise that all-important ROI spend.
But with a recession looming, that pressure is about to increase - big time.
Marketers will find themselves in plenty of meetings about ‘efficiency drives,’ ‘cost-cutting exercises,’ and ‘budget optimisation.’
Translated from business speak, you’re getting less money and will be expected to do more with it.
This will become even harder as sales cycles lengthen. Generally speaking, B2B sales cycles take between 6 to 9 months. But that always extends during a recession. Many B2B buyers will be running on tighter budgets, too. They’ll be exploring more options, performing greater due diligence, and won’t authorise purchasing until they are 110% confident.
Marketers must find new (and highly cost-efficient) ways to extend their personalised messaging campaigns to high-value prospects without blowing up a shrinking budget.
Isn’t it fun being the person in charge?
The smart will keep on spending
Many companies will already be looking at ways to cut advertising spending.
It sounds like the right thing to do. But it’s not.
Your advertising spending during a recession should increase. It’s counter-intuitive. But it’s the truth.
History says so.
During the significant recessions of 1974-75 and 1981-82, companies that maintained or increased advertising outgrew competitors by as much as 250%
The same thing happened during the 2008 credit crunch recession. Overall advertising spending dropped by 13%, yet the companies that maintained the same spending levels saw brand visibility rise by 3.5X.
This happens for three main reasons:
- The advertising market has become less competitive. You can purchase ad spaces for the same amount - maybe even less.
- Less competition in the space means more eyeballs on your messaging, increasing your overall brand recognition.
- It displays strength and stability during uncertain times. Customers will feel they can trust you to weather the storm.
As the saying goes, “When times are good, you should advertise; when times are bad, you must advertise.”
But you’ll probably need to say more than that during your meeting with the CEO or Finance Manager. So focus on the benefits of maintaining (or even increasing) spending during economic downtimes, arrive at the meeting packed with stats, and emphasise the increased ROI opportunities.
Marketing campaigns will become more targeted
But you’ll still need to spend smartly.
With increased ROI pressure and a commitment to carry on spending during a recession, it’s essential that you make every penny of that marketing budget count.
Marketing managers will look to refresh their messaging strategies or adopt entirely new campaigns that promise a more significant ROI.
Expect to see a surge of additional interest in content marketing. It’s the ideal way to reach customers during a recession.
Content marketing creates personalised, targeted campaigns that increase the number of website visits, leads, and sales without the long-term costs of PPC click advertising.
It’s a low-cost, high-reward marketing strategy promising long-term, sustainable results that compound over time. Research shows that content marketing costs 62% less than traditional marketing and generates 3X as many leads. This is the definition of doing more with less.
Good content is written with super-specific customer pain points or business needs in mind. Moreover, it attracts better leads. The people who click are the ones looking to buy, not browse.
“Content marketing is already a hot topic, but I think it will prove its worth over the next few years. When recessions kick in, marketing has to step up.”
Says AXD Director Alan Davies.
“It needs to find high-quality leads to pass onto the sales team to convert, and during a time when there are fewer prospects in the market. But this is exactly what targeted content campaigns are all about. They identify those most likely to buy, prime them even more with relevant info, and accelerate them toward the final stage of the buying cycle. When the content messaging is right, converting these leads will feel like an open goal for your sales team.”
More opportunities for marketing agencies
A recession will put many companies, especially smaller firms, into survival mode. And that’s not the best mindset to have when launching an entirely new marketing campaign strategy.
But these companies have to do something to maintain their brand awareness and keep attracting customers. Hunkering down and waiting for the good times to return is not an option.
As such, many of these firms will look for outside help.
This will present a golden opportunity for agencies that can provide a plug-in-and-play type marketing/content strategy.
Marketing agencies should be marketing their expertise more than ever because there will soon be heavy demand for their services.
There will be pain for some, opportunity for others
The boom times create a skills shortage. The bust times create a skills surplus. And, unfortunately, that will lead to the dreaded job cuts for many as companies (mistakenly) scale back their marketing and sales team.
But it’s not all bad news. Many companies will make the smart move and look to expand their marketing effort, creating new roles and job vacancies.
There will be some serious competition for these jobs. But, at the same time, companies will also be looking to reduce their time-to-hire to take full advantage of the unique business and growth opportunities hidden within an economic crisis.
The marketing agencies we mentioned will be looking for freelancers to cope with the rising demand. And experienced marketers who find themselves on the wrong end of those job cuts could promote themselves as a one-person solution for smaller firms looking to optimise their messaging and campaign strategies.
Customer retention will become (even) more important
Having (and maintaining) a loyal customer base is one of the best ways to make it through a recession.
But companies shouldn’t bank on customer loyalty, and they certainly shouldn’t see it as a given. Even the most loyal customers will start to consider other options during a recession, and the slightest chance of savings could turn the heads of newer customers.
To prevent a significant increase in churn, companies will have to up their messaging campaigns. Regular contact via email, newsletters, and relevant social media posts will become critical.
Brands must let customers know that they’re still doing business and that they understand that times are tough for everyone.
Honest and authentic messaging campaigns like this could become as effective as expanded loyalty programs or extra discounts for renewals. Simply listening to and then acknowledging a customer’s concerns can profoundly affect how they connect (or don’t) with a brand.
More discounts and promotions
Many companies that can afford to cut their prices will cut their prices. It presents an ideal opportunity to show their on the side of ‘regular’ people, i.e. “As the cost of everything else continues to rise, we’re providing the savings you need".
But cutting prices is a delicate matter. Marketers will need to increase the frequency and size of price promotions. However, they must then closely monitor what consumers perceive as “normal” price levels. Excessive or over-generous promotions mean consumers could revise their expectations about prices downward, threatening the long-term profitability margins during the recovery phase.
Extreme price deals can also lock firms into costly price wars with rivals.
And then there’s the issue of offering discounts and offers as a premium brand, i.e. how do you maintain the mystique of being high-end and exclusive while acknowledging that some of your customers can’t afford the expensive price tags that are part of your appeal?
This is just one of the many tough decisions that lie ahead for marketers. And those that come up with the best answer will grow, not shrink, during the turbulent times ahead.
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