Why You Shouldn’t Drop Your Marketing Budget in a Recession

She began her digital marketing career at an IT outsourcing company before transitioning into agency work, gaining experience at an SEO agency prior to joining Thrive. Use data tools like Google Analytics to track key performance indicators (KPIs) like conversion rates, cost-per-lead and customer lifetime value. Focusing on retaining existing customers usually offers better returns than chasing new ones. Yes, digital marketing during recession can help you engage with cost-conscious customers when done right. Email marketing, retargeting ads and social media engagement also perform well due to their low cost and ability to reach warm or existing audiences. If you’re navigating a downturn and need expert support to realign your marketing recession strategy, partner with a team that can drive results in uncertain times.

According to a study by Neilson, brands should actually rethink their decision to reduce their marketing budget. With inflation rates higher than they’ve been in more than 40 years, the big question marketing teams should be asking themselves is, how are we currently spending our marketing dollars, and do we really have a data-driven understanding of our profit margins, customer CaC, lifetime value, and AOV by key customer segments? Many brands spent the second half of 2022 in denial around inflation and how that was directly impacting their sales.

Users who used to be reachable on laptops and smartphones are now to be found in a non-skippable, targeted OTT environment. With advertisers having more advanced technology to reach their target users and determine the impact on revenue, the long-term problem of brand recognition is virtually erased. We can now quantitatively measure the impact that advertising is having on a company’s bottom line. And with today’s advertising technology, advertising investment can be smart and calculated, resulting in both short and long-term gains. Numerous studies have been conducted on the short and long-term impacts of advertising during declining economic conditions.

Audit Your Marketing Channels and Performance Benchmarks

A study published in Cornell Hospitality Quarterly concluded that hotel firms that invested in marketing during the 2008 downturn saw better immediate revenue outcomes and longer-run gains. T.J. Maxx (TJX Companies) boosted ad spend by 15% and shifted messaging to attract new bargain-seeking consumers. The stock market tended to reward companies, especially B2C service firms, that increased advertising during recessions, reflecting investor expectations that these firms would capture future growth. A 2011 Journal of Marketing study by Srinivasan et al. found that many firms actually underspend on advertising during recessions, to their detriment.

Update Your Messaging Based On Changes In Consumer Spending

Every economic downturn eventually ends, and when the recovery begins, brands that planned ahead gain ground fastest. People discover new platforms, spend more time in niche communities and engage with different content formats. Fortunately, digital marketing tools offer everything you need to stay informed. A disciplined, data-first approach is essential for digital marketing during recession.

Cutting back on advertising during a recession is often seen as a short-term cost-saving measure, but the truth is that marketing during economic uncertainty can actually cost less and reap bigger rewards. Don’t cut your marketing budget in a recession; stick with what works best. Recessions don’t last forever, so use the time to conduct a content gap analysis to better position your brand against competitors on valuable keywords and topics. Paid search through Google Ads, Bing and social media offer easy-to-measure ROI, valuable customer data and the opportunity to A/B test to optimize ad spend.

• In their article from 2014, The Role of Advertising during Recession, Prof. Dr. Ayşen Akyüz and Dr. Mustafa Ercilasun mentioned that “In a recession, the first things that a company usually cuts come from the advertising budget.
• And although the joke is still on marketers, it feels we’ve learned a thing or two from past economic downturns.
• In our latest Global Issues Barometer study, three-quarters (73%) of the global population exasperatedly admitted that they don’t expect their incomes to keep pace with inflation.

Even when customers are hesitant to buy, they’re still paying attention. For marketers, this means expanded reach without expanded cost. Digital marketing is particularly well-suited to recession conditions because it offers a high return on advertising during a recession investment (ROI) across multiple channels. These investments rarely pay off overnight but prepare you to scale when the market rebounds. It’s a time to fine-tune your messaging, improve your website, publish evergreen content and build operational resilience. Your email list, social media following and organic website traffic are all assets that can drive compounding value over time.

Working with a full-service digital agency (hey, like us!) breaks down silos and increases a brand’s ability to change messaging and content quickly. You’ll need to utilize SEO, Paid Search, social media and other sales channels to stay in front of existing customers and get your message out to potential new clients. The company grew in 2008, with sales exceeding both 2006 and 2007, before the financial impact was felt worldwide. As the Depression worsened, Post made significant cuts to its marketing budget. Marketing during a recession is therefore less expensive, more impactful, and more likely to result in long-term returns through increased market share.

Effective advertising can help brands that adopt short-term pricing changes reach customers effectively, capture market share, and encourage long-term customer loyalty. Ensuring that advertising investments work as hard as possible to drive higher media value is even more important during a downturn. Focusing on channels that allow for precision targeting, low wastage and high measurability is a good place to start. The energy crisis and the war in Ukraine have combined with prevailing negative economic conditions to create an economic downturn, and many economists are now saying that a global recession is all but inevitable. What started as a college kid trying to figure out how to run events in multiple cities has evolved into a text message-powered empire that consistently fills 1,000 to 3,000-person venues across the country, multiple times per week. The evidence clearly shows that maintaining or increasing marketing spend during economic downturns yields better results than cutting back.