Investing in marketing during a recession
Last Updated on April 19, 2023
We’ve all heard the cautionary news reports by now: an economic recession is looming (again) for 2023, or perhaps is already here in some sectors of the U.S. economy. You might find yourself asking some tough questions. How is our company going to weather this storm? Why should we continue to invest in marketing in a recession (or for that matter, other business needs)? What does this mean for my company right now and our marketing and advertising investments for 2023?
I’ll tell you up front the not-so-secret answer to these questions: keep moving forward and investing. Just because the economy is experiencing a slowdown does not mean there aren’t opportunities to grow and reach new customers. If you are nervous, like most leaders, you are not alone.
Been there, done that
I want to start by acknowledging the very real problems that occur during economic recession. Certain sectors will struggle more than others; the impacts of inflation are far-reaching and, unfortunately, many people will lose their jobs as a result.
My kids will be the first ones to tell you that I’ve been around for a while now (cue teenager smirking!). It wasn’t The Great Depression, but growing up in the 70’s and 80’s did define a lot of my thinking on economic challenges, inflation, consumer spending, and such. Watching your parents close off half the house to save money on electricity, sitting in the back seat of the station wagon observing the long lines at the gas station, and listening to your folks constantly remind you to close the door and turn out the light was real. These things weren’t suffering and hardship like my grandparents experienced in the 30’s, but times were certainly leaner than usual.
As an adult, I experienced my first recession as I graduated from Miami University in 1991. It was a tough time to find good job opportunities after four years of investing in my education. A decade later, I lived and worked through the dotcom bubble burst, and I was a casualty of downsizing. Then the financial crisis of 2008-09 was almost a complete panic around the world (not kidding). The more recent COVID shutdown and its ongoing fallout was a different kind of slow panic. More like a frog in a simmering pot of water that doesn’t realize he’s gradually being boiled alive by a slow economy, a broken supply chain, and artificial government spending.
These experiences offer a perspective that allows me to make business decisions with more understanding of what a recession means—and what it doesn’t mean. Here are three key points to keep in mind as you do your planning.
1. Don’t panic – The sky is not falling,
If you are a marketing leader, your first instinct may be to batten down the hatches until the waves have settled. But no one can predict when we’re going to hit bottom, when we’re going to rebound, or how long that downturn or upturn will last.
Those economic indicator numbers may seem like flashing red lights in a cockpit, but that doesn’t mean there’s no opportunity in the market. When you hear someone screaming, “The sky is falling!” take a moment and look around. People are still buying, investing, traveling, getting married, having kids, going to college, etc. Life still happens. The stock market or bond market doesn’t necessarily reflect what’s actually happening across the U.S. economy.
Since we started USDP over 20 years ago, we’ve served hundreds of clients across all industries—services, manufacturing, healthcare, nonprofit, financial, retail, government, etc. That means I have a pretty good litmus test for what’s going on across many sectors of the economy. When people panic because the housing market is slowing, I can look at our client list and see that other industries are growing.
2. Look for opportunities
Even in a slowing housing market, for example, great opportunities exist to attract new customers and to retain the ones you have. You have to get creative to stand out in the market, and focus on providing fantastic service to your customers. When your competition is worried and cutting back, that’s when you need to look for opportunities. For example, pick up some market share, or reduce prices to lock customers into a new contract. Offer a discount to get the order or contract.
When times are tough, ask yourself, “How can we get scrappy? How can we do more to position ourselves well for future growth?”
The moment things pick back up, your competition won’t be ready. When your competitor is working in an annual budget cycle, they can’t pivot quickly enough to capitalize on market swings. When it’s time to grow, they’re too late to readjust and meanwhile you’ve already picked up the ball and are halfway down the field.
Most companies waste a lot of money on marketing and advertising. They spend money on big ad campaigns simply because it’s a line item in the budget. They pour money into buying impressions instead of targeting audiences that will actually generate sales. It shouldn’t take a recession to address this waste problem.
Now is a great opportunity to analyze every line in the budget to identify where you might be wasting money. Do you have trade shows or mail campaigns that are unproductive? What other markets should you be in? Have you optimized your marketing/sales funnel? Are all the clicks and visits to your current website lost opportunities because your website is too vague and boring? This budget review exercise will help you get smart with your marketing spend.
Instead of feeling like you need to cut back on your marketing budget, you might discover you have the opportunity to reallocate, or even increase your spend. If you invest wisely in marketing your business now, you’ll be at the top of your customers’ lists the moment they are ready.
3. You can’t time the market
As a marketing leader, your job is to keep making decisions and promoting your company and products. If you stop investing, you won’t be able to clearly see when it’s time to start again. If you’re not in the market—if you pulled everything out and dropped anchor—once things take off again and the news is out, it’s too late. You missed it.
I see so many people trying to time the market and pull back on marketing, ad spending, and it hurts them in the long run. Then when their customers are shopping (because customers have needs even during a recession), they aren’t there. And when you’re not there for searching customers in a moment of need, you will struggle to make up for that far into the future.
The short version
In short, just keep runnin’, Forrest Gump! If you keep moving—even when you feel like you’re running through mud—you won’t get stuck. Set goals, invest in the future, make smart decisions with your marketing dollars. Above all, do these things with prudence instead of reactivity.
If you’re not sure about your current situation, how about a conversation? Don’t worry, we won’t try to sell you what you don’t need. Reach out to our team today.