I don’t know about you, but my entire LinkedIn feed lately is focused on one topic: recession. Whether we’re already in one or one is coming, companies are making decisions based on belt tightening and slower growth.
According to Harvard Business Review, most companies reduce marketing spend during a recession. Marketing activities seem like “easy” expenses to cut when compared to fixed costs like payroll or rent payments. However, history shows that companies that maintain marketing spend bounce back stronger when the economy improves.
But then again, you knew I was going to say that. As an ad agency, we are not an unbiased source on whether you should reduce marketing spend during a recession. You know it, I know it. I’m not going to be able to convince any CFOs not to cut your team’s marketing budget. They aren’t reading this anyway.
What I can provide is guidance on how to use your budget wisely during a recession, regardless of how big or freshly cut it is.
Reducing spend may work against your business interests in both the short and long term, but that’s the reality many of us face. Here’s how to make the most of your budget.
Your competitors will probably cut their advertising budgets. During the Great Recession, ad spending dropped 13%. That gives you an opportunity to increase your share of voice in a less crowded field.
When your competitors scale back their ad buys, increasing your spend will help increase your share of voice. If increasing spend isn’t an option, maintaining your existing spend while others cut will still increase your share of voice.
When the recession ends and buyers are ready to make a purchase, you want to make sure you’re the first brand on their list.
A recession is a great time to spend time building a strong foundation of content for your brand. Some examples of content with a long shelf life are blogs, white papers or guides, or videos. These assets may not translate to big sales right away, but they also can be slowly simmering away on the back burner for years to come.
If you are investing in new content, you’ll get more juice out of something with a longer shelf life. It’s like buying quality clothing instead of fast fashion. You spend more up front but it lasts longer and won’t need to be replaced after a season.
We released a video in June of 2020 during the coronavirus lockdown recession. It performed fine upon release, but the performance was not impressive.
When that spot was released, many of our prospects were not looking to start big campaigns with a new agency. There was still too much uncertainty in the economy and unwillingness to participate in live productions. Based on that environment, an argument could be made that it was a terrible time to release a new spot.
On the other hand, we live by the mantra that only 5% of your target audience is in-market at any given time. Getting out in front of people who may be prospects next year or the year after that is still valuable. That spot has been steadily gaining views and fans for the past two years. We had a prospect in early 2022 cite that spot as the reason they reached out.
Creating content with a long shelf-life gives your brand a strong foundation for when purchasing picks back up.
If you are under pressure to show quick results, then perhaps you tilt your marketing activities more into the activation or demand gen realm for a while. There’s nothing wrong with shifting priorities. But if you do, make sure that you don’t bring your brand building activities down to zero.
Brand building helps you stay top of mind for consumers so when they are ready to buy, they pick you. While demand in many industries does go down during a recession, remember that 95% out-of-market rule applies even in good economic times. Your marketing activities should always have some focus on brand building for those out-of-market folks.
In a recession, it’s still important to maintain some level of attention on the people who are just waiting for their corporate budget to loosen up again.
Companies with stronger brands perform better during recessions in general. Maintaining marketing spend through this recession sets you up to glide through the next one. We all know there’s going to be a next one!