Why it’s important to maintain your marketing during a recession
Articles•August 21, 2023•4 Minutes
Maintaining your marketing during a recession
A lot of headlines are talking about it – “Are we in a recession?”, “How hard will the recession be?”, “Will Canada go into a recession?” While different outlets and economists are discussing if we will/are, businesses are evaluating strategies and tactics to work through one. And as they consider all the options, here’s why it’s important to maintain your marketing during a recession.
When the economy takes a downturn, buyers tighten their budgets, reduce their spending, and re-evaluate their priorities. Business can see sales begin to drop, and often the first go-to solution is to cut costs to protect profit. One of the line items first to be reviewed and cut? Often marketing.
Why is marketing often cut during an economic slow down?
Under the profit and loss statement, marketing is considered an expense. Reducing spend on advertising may seem like a no-brainer way to positively impact profit. However, nothing lasts forever, not even a recession. And by cutting off marketing activities, you can nearly guarantee to remove yourself from the race when your customers are ready to spend again.
Why should you maintain your marketing?
Because, with marketing budgets being cut, buyers are exposed to less advertising. Companies that continue to advertise will have fewer competing messages to contend with and often see it reflected in their recession sales – staying the same or sometimes even increasing! What’s even better is that you can increase sales without increasing your marketing budget – something that you’d have to do in non-recessionary times.
One of the first, and the most often referenced still, studies that measured marketing effectiveness during a recession was completed by Roland Vaile, a Harvard graduate who tracked the performance of 250 U.S. companies from the end of World War I into the 1920s. He found that there was a positive correlation between marketing budgets and sales. Companies that increased their marketing budgets during the economic downturn increased sales by 20% over pre-recession levels. On the contrary, those who decreased their marketing spend suffered a sales drop 7% below pre-recession levels. (You can read more about this study in a number of marketing forums and magazines. A more recent article that referenced this study can be found here.)
So even during tough times when revenue may be declining, there’s still value in continuing with your marketing activities.
An opportunity to fine tune your marketing strategy
It can also be a good time to evaluate and consider the changes that may benefit the business in the long term. It could be time to analyze your customer base, look for new consumer insights, or explore more effective communication strategies.
The downturn could present opportunities to further grow your business. How can you innovate your products/ services to be more customer-focused? Is there an opportunity to grow the business in a new way?
When there is a downturn in the economy, it can present a number of opportunities to grow your business further – by building brand awareness, reviewing your communications and marketing strategies, or product refinements. We can help use your marketing budget smartly. With services that span across branding to websites to marketing, our team can help you navigate through these scenarios and strengthen your business. If you feel now is the right time, let’s connect.