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The Overwhelming Value of Recession Marketing

DATE: 13/09/22

AUTHOR: Fiona Kennedy

The news cycle can feel intense when it comes to recession forecasting. Cost of living pressures, fuel increases, interest rate spikes? The list is long and whether business or consumer, it’s hard to ignore the feeling of economic downturn closing in. Consumer confidence is low, buying power has decreased and individuals and companies across the board are adjusting their behaviours.

Spending and saving during a recession

What usually happens as soon as a recession is predicted is that consumers set themselves stricter priorities and in most cases reduce their spending in order to weather the financial storms ahead. In response, businesses sales drop, and companies begin to cut their own costs and reduce the investments they would otherwise be making in running and growing their business.

The real challenge for start ups and growth companies is to balance their efforts to pare back costs while still investing enough in their business to allow for long term brand health and survival. Not an easy set of priorities to juggle. As cut backs happen and businesses tighten their own belts, it is often the marketing budget that gets slashed before anything else. Understandable in some respects with experts arguing that saving jobs is far preferable to saving advertising spend.

But what of the long term effect of that marketing cut? And what about the argument that cutting marketing spend can have a far graver effect on the long term health of a business than anything else?

Why would you market to no one? 

Those in favour of stepping back from ad spend and marketing budget would argue that in a recession, customer numbers fall, disposable income drops and so really who would you be marketing to? It’s true that spending decisions are often made more carefully during times of downturn but nothing changes the fact that the bedrock of any business revenue and growth comes from loyal customers. Customers continue to exist and whether they continue to shop as frequently or as freely as they once did, they will continue to offer revenue that is essential during this time.

Reasons to market your way out of a recession

The arguments in favour of maintaining if not increasing your marketing spend are numerous and compelling:

Visibility becomes more attainable

When all around you companies are pulling back on their marketing spend, the noise level of advertising decreases and whatever advertising you do invest in will have more resonance.

What do your customers see?

Making a strategy of marketing through difficult economic periods can project an image of a stable and of a confident company that consumers can trust in even during difficult times.

It’s a buyers market

The cost of advertising and marketing often reduces during a recession so it can be a buyers market. Spending time rethinking your marketing strategy and spend can end up offering you more output than you might expect.

Long term priorities win out

Competitors who decide to cut marketing budget run the risk of losing their market share. If you maintain or increase your marketing output you can expect to pick up some of that market share. Even better, you’re more likely to hold onto it in the future. Being visible also offers the benefit of grabbing more of consumers ‘share of mind’ not just the share of market. When customers do ultimately think about buying you would be the brand they come to first since you have remained in the public consciousness.

The numbers don’t lie

Statistically speaking, companies who have spent on marketing during a recession are proven to do better in the medium and long term than those who cut back. While savings in the short term can be found, these come with inevitable damage to brand visibility and market share which are often irreparable.

It’s all in the evidence

There are more than 100 years of economic practice to show that investing in marketing during a recession is the business-smart thing to do. Recessions present opportunities for those companies who are willing to bet on themselves and consider the long term future of their brand. As the saying goes ‘When times are good, you should advertise. When times are bad, you must advertise.”

Overall statistics show that businesses who cut their marketing budget during a recession see their sales decline during the economic downturn. Unfortunately this pattern also continues for the three years that follow.

Post v Kelloggs

The best example of this was during the Great Depression of the1920s in the USA. Before the recession hit, Post were the market leader above Kelloggs but when the market shifted, Post cut back marketing spend significantly and Kellogg by contrast doubled theirs. Kellogg ended up growing profits by 30% and became the market leader, a position they still hold 100 years on.

As Henry Ford advised ‘Stopping advertising to save money is like stopping your watch to save time.’

While any downturn is a nerve wracking time for individuals and businesses, it’s hard to argue with the evidence. Historic recessions have made it clear which companies have come through them in positions of economic health and prosperity. For the months and years ahead, we’ll see which companies follow their lead. Which choose to invest in their marketing strategy and which don’t. Which companies take the difficult path of marketing now in order to secure growth and health for the years ahead.



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