A recession can be a trying time for any business. The prolonged economic decline causes unemployment or decreased wages, resulting in lower consumer spending. Companies, in turn, suffer lower revenues. Brands have historically cut their spend on marketing during a recession to minimize expenditure. 

The 1993 Great Depression saw ad spending reduce by 18.2%, while spending on marketing reduced by 7.5% during the COVID-19 pandemic. Research, however, shows that effective marketing during a recession increases brand margins. 

A report by Analytic Partners revealed that brands that increased their marketing spend during the last downturn recorded a 17% increase in sales. Those that cut their ad budgets risked losing 15% of their business. 

Recessions are opportunities to expand your market share while your competitors loosen up in their marketing efforts.

How Does Recession Affect Marketing?

Intelligent marketing during a recession helps you come out on top. Here are some of the ways that a recession affects marketing. 

1. Customers Decrease Spending

During a recession, customers prioritize basic and valuable purchases and decrease spending. Buyers are less willing to spend on products that offer them little to no immediate value. 

So, many companies lessen their budgets for marketing during a recession due to lower customer spending.

Marketing strategies like value-based marketing, targeted advertising, and user-generated content (UGC) can help increase customer trust in your products and increase sales. 

2. Sales Cycles Become Longer

Recessions make it harder to sell products as buyers ramp up their due diligence efforts to get the best value for their money. The cost per customer also increases as customers need more convincing to make a sale, which lowers your marketing return. 

Yet, as consumer confidence declines, lead generation efforts will help you attract buyers.

3. Pressure to Prove Marketing Return on Investment (ROI)

Your marketing team faces greater internal pressure to prove the ROI of their marketing during a recession. This is due to budget constraints, longer sales cycles, and stricter investor conditions. 

Optimizing your marketing system can help you create more effective marketing campaign reports. 

You should also let go of one of the marketing misconceptions that marketing has to be expensive. With the right strategy, you can achieve high returns with minimal expenditure. 

Online, social media, and email marketing are examples of low-budget marketing efforts that can generate good returns. 

What Research Shows about Marketing during a Recession

Businesses take different approaches when marketing during a recession. Here's what research shows about marketing during a recession…. 

1. Brands Consider Future Economic Crisis When Preparing Marketing Budgets 

Research indicates that brands plan their marketing budgets while factoring in a looming economic crisis. 

Talks of a 2023 recession are already influencing how much 75% of brands are willing to spend on marketing in 2023. 

According to the research, 4 out of 10 multinational companies plan to maintain their 2022 marketing budgets, while 30% will reduce their spending. 

2. Brands Reduce Spending on Marketing during a Recession and Increase It After

Research also shows that marketing spend increases after a recession. 

Ad spending dropped 18.2% in the U.S. during the Great Depression and rebounded to 24.5% a year later. Likewise, advertising expenditures decreased by 7.5% during the COVID-19 outbreak and rose by 19.5% in 2021.

3. Sustained Advertising Increases Market Share

Decreasing ad spend in times of crisis is inefficient. 

An analysis of recessions between 1980-2000 showed brands that maintained their ad spend saw a 1% in their market share. 

Brands that maintained or increased their ad spend reported a 1.6% increase in their market share. Those that cut their marketing spend showed the lowest market share increase.

4. Brand Messages Must Appeal to Consumers' Sentiments

Studies show that messaging for marketing during a recession must be customer-sensitive. 

During the COVID-19 pandemic-driven recession, for instance, 38% of consumers didn't like the use of humor in advertising. 

Social responsibility also counts during a recession. According to a 2020 consumer survey, 65% of respondents said that a brand's behavior and response during an outbreak influences their future purchase decision. 

Reasons You Shouldn't Stop Marketing during a Recession

Slowing your marketing during a recession means missing out on current and future growth opportunities. 

Here's why you should maintain or increase your ad spend….

1. Expose Customers to Your Brand

Customers may not buy much during a slowdown, but they are still consuming daily. Those who buy will choose the brands that are advertising to them. Even customers who decide to buy in the future will remember your brand as they were exposed to it during the recession.

Advertising during a crisis also gives a good impression of brand stability, increasing your brand image and perception.

2. Advertising Costs Decrease Due to Lower Demand

Marketing companies may provide advertising incentives during recessions as part of their social responsibility initiatives. Google and Facebook, for instance, created marketing incentives for small businesses during the pandemic.

Advertising also gets cheaper as there's lower demand as many brands ease up on marketing. 

You can advertise more for less and attain better ROI when marketing during a recession. 

3. Long-Term Growth Moves

Marketing during a recession creates opportunities to hedge out your competitors. 

Continuing to market while your competitors slow down will increase your market share in the long run.

History shows that companies that have doubled up on marketing during a crisis have emerged stronger after the crisis. VBRO, for instance, increased its market share 10 times by outspending Airbnb 10-fold during the pandemic period. 

The decrease in competition can also benefit your content marketing efforts as it becomes easier to rank on search engines. 

Takeaway 

The right strategy can help you thrive by marketing during a recession.

Increasing or maintaining your budget for marketing during a recession can lead to present and future growth for your company. 

You do not need a huge budget to market effectively and keep your brand on top of consumers' minds. The right marketing agency can help you create a marketing strategy that generates maximum revenue within your budget. 

Viral Solutions is a full-service agency made up of a team of obsessed marketers committed to taking your business to the next level. Request a free consultation with one of our team members today to level up your business.