Importance of Marketing in a Recession
The word ‘recession’ causes fear among businesses and consumers alike. And since recessions almost always follow a period of economic growth and prosperity, it feels especially oppressive and alarming.
Today, in the United States and across Europe, central banks are raising interest rates at a rapid pace to combat inflation which is threatening a severe slowdown. Clouded by uncertainty, this is when consumers pull back and ‘circle the wagons’ for the coming storm.
As a business owner, your first instinct during the outset of a recession is to cut your budget, trim costs, and save money. Logically, it seems like a prudent idea — you want to survive the downturn.
However, for intelligent marketers, it’s a perfect opportunity to fine tune and strengthen your brand and focus on your existing long-term customers. How you respond now will make a huge impact on your business’s future, both now and after the recession.
The Importance of Marketing in a Downturn
Marketing and advertising become especially important during a downturn, and this has been demonstrated repeatedly.
During the ‘Great Recession’ in 2008, advertising dropped by 13% almost immediately. Companies panicked and pulled back on ad dollars and marketing spend. The result for many of these companies that took a reactive or inactive stance was struggling sales and stagnant growth that lasted well into the recovery period.
However, the companies that increased advertising spend and went all in actually increased market share during the recession. They took advantage of the reduced competition and won over consumers.
Historically, there have been examples of smart, innovative companies taking advantage of the pared down marketing space during a recession where they found ideal circumstances, including:
- Advertising space that becomes much less competitive, so ad buys become less expensive. While everyone else is pulling back and saving money, smart companies jump in with targeted ads at a greatly reduced cost.
- From the consumer’s perspective, these companies are demonstrating strength and corporate stability, which can be seen as a positive sign. They want to do business with these companies during and after a recession.
- With less competition, a company can expand their brand loyalty and increase Share of Voice (SOV). The marketing arena is a lot less crowded and gaining presence becomes a lot easier.
A good example of this strategy would be Amazon in 2008-2009. They effectively grew their revenue by over 28% during one of the bleakest times in economic history. They did it by innovation (they released Kindle) and digital advertising/marketing (it was the first year that eBooks sold more than print books during the December 2008 holiday season).
Focus on a Solid Digital Marketing Strategy in a Recession
It’s possible to increase sales during a recession. Handled deftly, a recession is a time for innovative marketing strategies and smart, strategic moves that can exceed marketing goals.
Start with a strong digital marketing strategy which is vitally important during a recession. You want to reach your target audience and give them every opportunity to buy from your company. While it may seem intuitive to cut back on things like email marketing, social media ads, or blog posts, this is exactly the wrong time.
Instead of cutting back, concentrate on a marketing plan that includes these eight tips:
- Be sure your digital presence is in top shape — and if not, invest and upgrade. Now is the time to focus on customer experiences or user experience (UX). Take a look at your digital footprint and ensure that you have maximized every avenue, including:
a. Design (or redesign) and development of a mobile responsive site that offers outstanding UX/UI. This is often the #1 cause of slumping sales — a poorly designed website where customers don’t engage because of a shoddy experience. If a customer doesn’t find a path to what they are looking for in the first few seconds, they will ‘bounce back’ to the search page and head to your competitor.
b. On-point SEO, including on-page and technical SEO and link-building, which enhances results from search engines. Consider an SEO audit from a full-service digital marketing firm, like Lounge Lizard, that can identify where your website can benefit from improvements.
c. A strong brand that relays confidence and strength to your customers.
d. A straight path to lead generation or sales for your product or service.
2. Keep your audience engaged through content marketing strategy. During a recession, consumers are more interested in researching buying decisions. They may postpone big-ticket purchases until they can fully understand the product or service. A strong content marketing strategy ensures that you have information reaching those consumers through various avenues, including social media and other marketing channels.
3. Focus on your existing customers. During times of uncertainty, customers are less likely to try new products or services. They like the comfort of tired and true relationships. These are also the customers that are more likely to recommend your company to their friends or associates (and word-of-mouth advertising is free).
4. Continually update your market research. What is true about your customer during an economically prosperous time, is probably not the same during a recession. Behaviors and motivators change at the outset and consumers continue to adapt as they move through the recessionary period.
5. Offer innovative pricing — a good example is Warby Parker. Launched during the 2008-2009 recession, Warby Parker offered a unique ecommerce experience coupled with amazing prices that transformed the way a generation buys eyeglasses.
Another innovative solution is tiered pricing on products or services if possible. That way consumers or companies can try your services at a price level that they are comfortable with and increase their involvement if they want or as funds allow.
6. Look to your website analytics for help in understanding your conversion rate and long-term brand health, including what pages have the most and least engagement, abandoned cart information, and your click-through-rate. This can help you improve your marketing efforts during and after the recession.
7. Review your marketing stack. Are you using the best vendors? Has it become overwhelming to keep track of the different engagement tools that you use? Is there redundancy in the vendors, e.g., are you using both HubSpot and Salesforce to manage your marketing campaigns? You may need management services to streamline your marketing efforts and costs.
8. Most important — don’t panic. Recessions are part of the economic cycle. They tamp down an overzealous economy. On average, recessions last about 15 months total. Fifteen months isn’t really very long in terms of a business’s lifecycle.
How to Modify Your Ad Strategy in a Recession
Like the stock market during a bear cycle, everyone’s instinct is to cash out and stop spending marketing dollars on advertising.
A better solution would be to prioritize and diversify your advertising and marketing strategy to include taking advantage of the lower costs.
For that, you need a solid understanding of your customers. As a good example, keep an eye on your local grocery stores. During a recession, lower priced grocery stores will focus on the basics and reduce their ad spend on luxury items and higher priced goods.
While high-end grocery stores have clientele that are less affected by inflation and continue to buy expensive goods, so that’s where they focus their ad spend. Where do your products and services fit in the continuum? Marketing through recession means understanding your target audience and adjusting as needed.
Where to Turn for Help on the Dos and Don’ts of Marketing in a Recession
Uncertain economic times can be unnerving at the least. If you find yourself in need of strategic marketing advice, it often makes sense to bring in the experts. It can be money well spent to have your current strategy evaluated by knowledgeable pros who can make sensible recommendations for your business now and in the future.
When creating a marketing strategy that is bullet-proof during a recession, talk to the experts at Lounge Lizard. Offering full-service digital marketing, design, and development services, Lounge Lizard has over 20 years of experience and has help countless companies weather recessions in the past — most thrived!
Contact Lounge Lizard to learn more about successful marketing in a recession.