Recessions are difficult times for businesses. It is tempting to cut all costs that aren’t absolutely necessary for keeping the business going.
However, some marketing efforts are essential during a recessionary period to maintain or grow market share, keep customers informed of changes or new product offerings, and build brand awareness and equity. As with all expenditures during a recession, businesses must be mindful of their marketing budgets and make sure they are getting the most bang for their buck.
Certain aspects of marketing, such as research and planning, should not be neglected or cut altogether during a recession. The marketing budget should be flexible to allow for adjustments as needed. And finally, businesses should keep an eye on their competition to see what they are doing and adjust their own strategies accordingly.
But What Do I Cut?
Again, some sort of marketing strategy is essential during a recession. Though you might have to spend less, you still need a plan of how you will maintain your existing customer base during the economic downturn.
Lack of growth is, in essence, attrition of the business, so you should make a marketing plan and optimize your budget to get the most bang for your buck.
There are certain parts of a solid marketing plan that you should not give up on, even during a recession or other economic anomaly, like the COVID-19 pandemic. Your marketing plan should be flexible, so that you can adjust your budget as needed. Here are some things to keep in mind when determining your marketing budget during a recession:
Continuously assess your current situation and make adjustments as necessary.
Make sure you have a clear understanding of your target market.
Keep track of what's working and what's not. Cut back on what isn't working and invest more in what is.
Prioritize your spending. Focus on the most effective marketing activities.
Be willing to experiment. Try new things and see what works for your business.
Keep an eye on your competitors. See what they're doing and adjust your own strategy accordingly.
Watch your ad spend. Unfortunately, advertising budgets are typically a huge part of marketing campaigns (though they really should be thought of separately). These can balloon out of control very quickly.
Remember that evergreen content is yours, forever. Your marketing team can work on case studies, podcasts, SEO-rich blog posts, white papers, and other digital marketing initiatives that will better prepare you for the end of a downturn.
Work on social. Without paying for ads, your efforts on Facebook, LinkedIn, Twitter, Instagram, and beyond cost whatever you pay your team for labor and overhead. You can still reach your target audience online using social media without advertising, particularly if you have a skilled digital marketing team on your side.
When a recession hits, it’s a great time to fine-tune your existing marketing strategy. Keep doing what you’re doing, but lower your advertising spend, reduce your content marketing budget, and just do everything on a smaller scale. This is a data-driven approach to recession marketing that actually works and won’t leave you falling in search engine rankings or without share of voice when the economy looks up.
Consider what’s in-house. Many companies have internal marketing teams. If it isn’t possible for you to retain these staff members during a great recession (or any economic time of strife), consider outsourcing your marketing investments. Marketing agencies know online advertising, customer needs, and understand marketing forecasts better than most in-house marketing leaders anyway, and chances are good they can take over your digital marketing efforts for less than what you were paying your in-house team.
What you spend on marketing during a recession will depend on many factors, but by following these tips, you can ensure that your marketing budget is well spent.
How Does a Recession Affect Consumer Habits?
It’s no secret that consumers change their spending habits during difficult times like an economic recession. Businesses must understand how a recession affects consumer behavior and learn to adjust their marketing strategies accordingly.
Some of the ways that a recession can affect consumer behavior include:
A decrease in discretionary spending
An increase in value-consciousness
A shift in spending from luxuries to necessities
A change in where people shop (more bargain hunting)
Less brand loyalty
By understanding how a recession affects consumer behavior, businesses can adapt their marketing strategies to address these changes. For example, if luxury items are seeing a decrease in sales, businesses may want to focus their marketing efforts on more affordable products. Or if people are becoming more value-conscious, businesses may want to highlight the value of their products or offer discounts and deals.
Staying in tune both with customer needs, data-driven analytics of the spending of your target audience, and predictions for what to expect of the downturn from economists will put you in a much better position to weather the storm.
What Should You Continue to Pay for Marketing During a Recession?
Can you stop having a marketing plan when times are tough? The short answer is no. And certainly not if you want your company to survive.
Here’s the longer answer: no, you cannot stop having a marketing plan, even during a recession. A marketing plan is essential in guiding your marketing decisions and ensuring that your budget is well spent. Without a plan, you run the risk of making haphazard decisions that could end up costing you more in the long run.
Still, you may not be able to spend as much as you did before. What things should you still pay for?
Research and planning
Even though money is tight during a recession, businesses should not cut back on research and planning. This is the time to really understand your target market and figure out how to reach them in the most effective way possible. A well-thought-out marketing plan will be essential in guiding your marketing decisions and ensuring that your budget is well spent.
Your brand is what sets you apart from your competitors and helps customers remember you. During a recession, it’s important to keep up with branding efforts to maintain customer loyalty and remain top-of-mind for potential customers. Your brand should be consistent across all marketing channels, from your website to your social media platforms to the way you answer the phone.
It’s always cheaper to keep existing customers than to acquire new ones, so during a recession businesses should focus on retaining their current customer base. Customer retention strategies could include loyalty programs, targeted email campaigns, or personal follow-ups.
Why Marketing is More Important Than Ever During a Recession
In some ways, marketing is actually more important during difficult times than in good ones. Here’s why:
Cutting Costs Will Result in Long-Term Losses
Many businesses make the mistake of cutting marketing costs during a recession in an effort to save money. However, this can actually end up costing the business more in the long run. Once you’ve cut your marketing budget, it’s very difficult (and expensive) to build it back up again.
So even though it may seem like a good idea to save money in the short-term, cutting marketing costs will likely result in long-term losses for your business.
During a recession, there are usually more businesses competing for a smaller pool of customers. This means that businesses need to work harder than ever to stand out from the competition. An effective marketing strategy can help you do just that.
What Matters to Customers Changes
When the economy takes a turn for the worse, people’s spending habits change. They may become more value-conscious or focus on needs over wants. As a result, businesses need to adjust their marketing strategies to reflect these changes.
Decreases in Spending by Other Brands Gives You a Leg Up
When other businesses are cutting their marketing budgets, it provides an opportunity for your business to increase its market share. By maintaining or even increasing your marketing spend during a recession, you can gain ground on your competitors who are cutting back.
When the Recession Ends, You're Ready
Marketing during a recession can also help position your business for success when the economy recovers. Studies have shown that businesses that maintain or increase their marketing spend during a recession are better positioned to grow when the economy improves.
How Big Should Your Marketing Budget Be During a Recession?
There is no magic number for how big your marketing budget should be during a recession. The size of your budget will depend on factors such as your industry, target market, and marketing goals. However, it’s important to remember that you shouldn’t automatically cut your marketing budget just because there’s a recession. In fact, doing so could put you at a competitive disadvantage.
Your marketing budget should be based on your overall business goals and objectives. However, as a general rule of thumb, your marketing budget should be between 2-10% of your total revenue. So if your business is bringing in $100,000 per year, your marketing budget should be somewhere between $2,000 and $10,000.
That’s still a huge range, of course. There is no easy answer when it comes to how big your marketing budget should be during a recession. Every business is different and will have different marketing needs. However, there are a few things to keep in mind when making your decision:
How much can you afford to spend? Make sure you have a realistic understanding of your finances and what you can afford to spend on marketing.
What are your goals? Be clear about what you want to achieve with your marketing efforts. This will help you determine how much money you need to spend to reach your goals.
What is your competition doing? Keep an eye on what your competitors are doing and make sure you’re spending enough to stay ahead of them.
What to Cut During a Recession
If you find yourself needing to cut costs, there are some areas of marketing that are less essential than others and can be cut back on without too much impact. These include:
Advertising - Advertising is one of the first things businesses tend to cut when money gets tight. However, it’s important to remember that advertising is what helps you reach new customers. If you cut back too much, you could end up losing ground to your competitors.
Market research - While market research is important, it can be expensive. If you need to cut costs, you may want to focus on less costly research methods such as online surveys or customer interviews.
Public relations - Public relations can be a great way to generate buzz for your business. However, it can also be quite expensive. If you need to cut costs, you may want to focus your PR efforts on less costly activities such as social media or press releases.
We Can Help!
Feeling lost about what to cut? Know you need to maintain a marketing budget during this recession, but unsure how to go about it? We are here to assist you! Our team is fully-remote, which means we have no overhead. That means we can offer you a more cost-effective marketing solution when compared to most other marketing agencies.
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It's a brag, yes, but we believe so ardently that we can help you, we're okay shouting it from the rooftops. Please, don't hesitate to reach out. We can work with you to find a marketing strategy that fits within your budget during the recession (or any time). Then, we can execute the strategy on your behalf so you can focus on steering your company through these difficult times. Contact us today!