When a recession hits and money is tight, businesses tend to look for ways to cut costs until the economy improves – and marketing is often first on the chopping block. But this is a big mistake. It tells the world that you are not open for business at a moment when you want to be communicating the opposite.
As an entrepreneur, I understand the impulse to reduce marketing spending during an economic downturn. I did exactly that during the 2008 recession and have learned from my past missteps. Now I’m investing more than ever in marketing because I know this strategy will result in long-term gains for my business. Here are three reasons why you should market more, not less, in a recession.
Your business will shrink in line with your customers.
We are in the midst of a global crisis unlike any we’ve experienced before. We don’t yet know how long the recession will last or how damaging it will be, but we must be prepared for a long recovery. A forecast from the International Monetary Fund predicts a nearly 5% contraction in global GDP this year, with projections for the U.S. (8%), Europe and the UK (10.2%) higher than the average.
You can expect your business to shrink as your industry marketplace contracts. You will likely lose some of your current customers, which means you need to step up your marketing to attract new customers. Use this time to build relationships and trust with your new customer base. When the market eventually recovers and we re-enter a period of expansion, you will be well-positioned to grow with their businesses. Not only will you be able to reclaim the market share you lost, you’ll be able to increase it.
Figuring out what works for your business will multiply your success.
Marketing isn’t magic; it’s math. Before you spend more on marketing, take the time to understand what platforms and strategies are valuable for your business. Analyze data from past campaigns and look for insights that can guide your efforts in the future. Is there a standout example you can learn from – for example, a course that sold out with Facebook ads or a YouTube video series that led to a spike in subscriptions? Have you experimented with different marketing approaches, giving each one enough time and variation to decide if it’s effective? When you find a strategy that works, do more of it.
It’s also important to remember that customer behavior is changing rapidly. In just a few short months, the crisis has accelerated the digitization of how we work, play, shop and connect. According to data from Mastercard SpendingPulse, which analyzes reports on retail sales across all payment types in select global markets, e-commerce sales in the U.S. doubled in one year, increasing from 11% of all retail sales in April/May 2019 to 22% in April/May 2020. In the UK, e-commerce sales reached an all-time high – 33% of total retail sales.
Many of these digital shifts will lead to permanent changes. In a recession, some industries will die as other opportunities emerge. Pay attention to trends so you can continue to spend your marketing budget wisely.
Now is your greatest opportunity to be visible at a reasonable investment.
At the height of an economic expansion, everybody is marketing. Costs go through the roof, and you have to fight for people’s attention in a crowded marketplace. In a recession, however, marketing space becomes plentiful and affordable as competition plummets. Many companies are cutting back on marketing, so you can spend far less to reach more people with your message.
During a recession, the economy doesn’t grind to a halt. People are still spending money; you just need to give them good reasons to spend it with you. Take advantage of this opportunity to spend on marketing that boosts your visibility, builds on past successes and helps you grow with your customers as the economy rebounds.