The current Coronavirus pandemic is already impacting businesses, and when combined with a potential recession, it’s easy to feel overwhelmed. The immediate reaction for businesses facing a recession is often cost-cutting.

Image Source: GOBankingRates Our first thought might be to question the value of our marketing budget. However, reducing marketing efforts during an economic downturn can actually harm a company’s long-term market share. This post will explain why maintaining marketing spending can be a crucial strategy for businesses to withstand a recession. We’ll explore:

• The significance and advantages of marketing during a recession.
• Tactics to maximize your existing budget.
• Adjustments to make with a smaller budget. We’ll also look at real-world examples of businesses that thrived during recessions thanks to continued marketing and remain industry leaders today.

Why maintain marketing during a recession?

Many are surprised to learn that increasing marketing during a recession can lead to growth. Companies that maintain their marketing presence during a recession stay on the forefront of the minds of consumers, leading consumers to naturally gravitate towards these brands when their spending power returns. Additionally, when you continue your marketing efforts despite an economic downturn, you project an image of strength, leadership, and long-term vision to your audience—qualities highly valued in uncertain times. Even if your business isn’t at its peak, clients and potential customers are drawn to stability, however small. Conversely, cutting back on marketing during a financial decline diminishes your online and offline visibility, creating opportunities for competitors to capitalize on the situation.

As consumers regain their spending ability, they will naturally lean towards brands that have remained prominent in their minds.

Strategies to optimize your marketing budget during a recession

While full-scale marketing may not be feasible during a recession, completely stopping is not a viable solution. Let’s explore ways to maintain marketing efforts while staying within budget.

1. Focus on existing customers

A loyal customer base is invaluable during a recession. It’s more cost-effective, simpler, and significantly more impactful to market to existing customers than to acquire new ones. In fact, we’re talking about a difference of approximately 5-25 times.

Image source Show appreciation to existing clients by staying connected through emails, offering exclusive discounts, and more. They are the ones who make repeat purchases, maintain your services, and importantly, recommend you to others.

Your loyal customer base becomes one of your most valuable assets during a recession.

2. Leverage consistent branding

Undoubtedly, a recession demands greater effort. However, in marketing, this doesn’t necessarily mean less work. There’s actually less “marketing noise” to compete with, giving your message a better chance of being heard. The key is to maintain brand consistency and audience engagement. Create a monthly marketing plan that includes a combination of blog posts, emails, PR content, newsletters, and ads.

Image Source: The Balance Small Business

These efforts don’t have to be expensive, just consistent, to maintain relevance without exceeding your budget.

3. Empower and uplift your audience

Keeping your marketing plan current is always essential, especially when market and economic conditions shift. Crucially, ensure your brand messaging is positive, empathetic to the current mood of clients and prospects, and avoids any negativity. Encourage and empower your audience with your messaging, fostering a strong emotional connection.

Image Source: Business Insider An analysis of nearly 880 case studies by the World Advertising Research Center revealed that emotionally engaging advertising campaigns were more profitable than those emphasizing transactional messages like discounts during challenging times.

Advertising campaigns focused on emotional connection proved to be more successful than those prioritizing transactional messages.

Adapting your marketing during a recession

Considering that 19% of people pre-COVID already reported higher expenses than income, the need for adjustments as consumer incomes decline further is evident. These tighter budgets, shifting priorities, and evolving customer shopping behaviors necessitate not just continuing but also modifying how you market your business during a recession. Here are some techniques to adjust to the unique challenges of a recession without compromising marketing quality or reach:

1. Reassess your offerings

Recessions have a dual impact. While some businesses struggle, others can actually thrive during these times! The key difference lies in the nature of their goods or services. Businesses offering necessities will always have customers, regardless of the economic climate. If your company doesn’t offer “must-haves,” consider adjusting your offerings to include or emphasize essential services.

2. Enhance your online presence

Ensure all your online profiles clearly communicate that your business is still operational. Update your hours, promote current offers, and maintain active engagement with your audience. Refer to this guide for tips on effectively communicating updates and information to customers during uncertain times.

3. Adjust your budget allocation

Whether your marketing and/or advertising budget remains stable or faces cuts during a recession, adjustments to spending allocation may be necessary. Focus on high-performing channels and reallocate resources accordingly.

Image Source: Smart Insights

4. Adapt your tone

Recessions are emotionally charged periods. Adjusting your tone can help you connect with your target audience and maintain customer loyalty. While conveying your brand message and core values, audit your content to remove potentially insensitive or controversial elements from your website, automated emails, and social media.

5. Review your KPIs

Key performance indicators (KPIs) and marketing analytics can pinpoint successful campaigns versus underperforming ones. Prioritize those generating income or leads and discontinue those that aren’t. This not only saves money but also drives sales during challenging times. In a recession, you may need to adjust some of your marketing goals and objectives, along with the KPIs used to measure them.

6. Refine your customer targeting

Targeting the right audience is always crucial, but it becomes even more vital during economic downturns, especially with limited budgets. Precise targeting minimizes wasted spending on irrelevant clicks. Consider focusing on a specific niche within your audience or even exploring new niches that have emerged. Understand your customers’ current needs and adapt your targeting accordingly. Segment your email lists based on new patterns and retarget website visitors to attract the right audience and maximize your marketing ROI.

Image source: Accenture

7. Optimize various ad components

Experiment with variations of ad copy, button text and colors, targeted keywords, ad placements, channels, and more within your marketing and advertising materials. A/B testing can help refine your advertisements on platforms like social media, Google, and Bing, as well as identify high-converting keywords for website SEO.

Success stories: Companies that thrived during recessions

Let’s examine a few examples of companies that demonstrated recession-proof growth due to their enhanced marketing efforts.

1. Kellogg’s during The Great Depression

In the 1920s, Post dominated the market. However, when the Great Depression hit, the company significantly reduced its marketing efforts. Meanwhile, their competitor, Kellogg’s, doubled down on advertising and experienced a remarkable profit surge of 30%! After taking the lead in the 1920s, Kellogg’s remains the category leader a century later.

Similarly, Roland S. Vaile tracked 200 companies during the 1923 recession. His findings showed that companies maintaining advertising during the crisis were 20% ahead of their pre-recession position. Conversely, companies that cut back on marketing remained in recession and lagged 7% behind their 1920 standing.

Companies that continued advertising throughout the 1923 recession emerged 20% ahead of their pre-recession position.

2. Toyota during the 1973-1975 recession

The 1973-1975 energy crisis triggered a 17-month recession. Initially, the Toyota Corolla ranked second to the Honda Civic in the first government-issued miles-per-gallon (mpg) report. However, this changed during the recession. Toyota resisted the temptation to cut down its marketing budget, and by 1976, Toyota became the leading imported carmaker in the United States.

Image source: Flickr

3. Pizza Hut during the 1990-1991 recession

McDonald’s chose to reduce marketing and promotion spending during the 1990-1991 recession. In contrast, Pizza Hut and Taco Bell capitalized on this reduced competition by maintaining their marketing activities. Consequently, both companies witnessed increased sales—Pizza Hut by 61% and Taco Bell by 40%. Notably, McDonald’s experienced a 28% sales decline.

4. Amazon during The 2008-2009 recession

While the world faced a recession in 2008-2009, Amazon achieved a sales growth of 28%.

Their strategy? Continued innovation with new products, including the launch of the now-ubiquitous Kindle. This bold move helped Amazon increase its market share, and on Christmas Day 2009, Amazon customers purchased more ebooks than printed books! Today, Amazon enjoys a dominant market position, built on years of cultivating a loyal and satisfied customer base.

Marketing during a recession: Don’t stop

Marketing during a recession is undoubtedly challenging, requiring you to go against ingrained instincts and standard practices. Factor in changing customer behavior, and the situation becomes even more complex. Budget optimization and smart prioritization are crucial to navigating this new landscape with your customers. However, this doesn’t mean halting marketing expenditure. Instead, view it as an opportunity—a chance to provide prospects with what they need most during tough times and solidify existing customer loyalty.

The key takeaway is to hold onto your marketing budget. Ultimately, the only effective marketing is consistent and persistent marketing. As Peter Drucker wisely stated, “Marketing and innovation produce results; all the rest are costs.“