It is a truth universally acknowledged, that a business facing economic recession may be tempted to cut, or at least cut back, their marketing budget first. For many, recession marketing simply means no marketing.
Don’t do it!
While seemingly a logical step, the reality is that continued marketing during a recession can mean the difference between long term success and failure. Getting rid of marketing during tough economic times is short-sighted at best, catastrophic (business-failing-stuff) at worst.
Why? We’re about to tell you! Let’s start by defining recession marketing; move on to figuring out if it’s something you need to be thinking about right now (spoiler alert: it is); and finally, outline your best steps to successfully marketing your business in a consumer world that is increasingly ruled by budget constraints.
What is ‘Recession Marketing’?
To explain recession marketing, we must first define a ‘recession’.
Business Dictionary defines ‘recession’ as a “Period of general economic decline, defined usually as a contraction in the GDP (gross domestic product) for six months (two consecutive quarters) or longer. Marked by high unemployment, stagnant wages, and fall in retail sales, a recession generally does not last longer than one year and is much milder than a depression.”
In non-economist speak, this can be translated as six months of negative growth in the economy, wherever you may live, with an obviously visible decline in economic activity, i.e., people spending money. During a recession, people will lose their jobs, wage increases will be non-existent, businesses will produce less, and consumers will buy less.
Recession marketing, then, is the budget-sensible, but also forward-thinking marketing strategies you put in place during such tough economic times. Recession marketing strategies should be designed to keep your business afloat now to survive the recession, and then arrive on the other side, positioned to thrive.
Is a Recession a Concern Right Now?
Honestly? It’s hard to remember a time when there weren’t rumblings of an imminent recession. Which makes it all the harder to predict, even for top economists, if and when a recession truly is just around the corner.
That said, signs right now have economists increasingly convinced that 2020 will usher in a recession: 40% of top economists expect the US Federal Reserve to cut interest rates in response to a deteriorating economy over the next year. US economists also point to “yield curve inversion” (when long-term interest rates are paying out less than short-term rates), an economic indicator that has preceded every recession over the past five decades, as a sign of a coming U.S. recession. Meanwhile, half of European business leaders believe a recession will happen in the next five years amid rising bad debt losses. (Not helped by the uncertainty that is Brexit.) And here in Canada, since January (2019) the Financial Post has posted a series of articles and opinion pieces which reflect fairly adamant views that a recession on home soil is mere moments away. Exhibit A: Is Canada headed for a recession?; Exhibit B: David Rosenberg: Don’t let ‘blockbuster’ job numbers fool you, Canada is one rung away from recession; Exhibit C: Canadian dollar could sink to record low of 62 cents as economy slides closer to recession, says David Wolf; Exhibit D: A recession is coming — and maybe a bear market, too. We could keep going, but you get the picture.
Whether you call it a recession, or more optimistically (euphemistically?) a ‘tight market’, the fact remains the same: the economy isn’t in a boom phase right now and for long-term success businesses must adapt accordingly.
It’s a grim, fairly depressing, outlook to be sure. It’s not surprising, then, that your average consumers are tightening their belts, with budgets being lowered on both personal and business levels across all kinds of industries.
But let’s not forget that adversity holds opportunity. This is where recession marketing comes in. Let’s dive into what you can do with your digital marketing efforts to survive and thrive in any economic crunch.
5 Rules to Marketing in a Recession (or at the very least a tight market)
1. Do take notes from history
Studies have shown that in previous recessions businesses that continued to invest in marketing saw growth in their businesses while those that pulled their budgets saw a decrease in sales.
Which studies are these? We’re glad you asked.
Back in 2008, in the midst of that recession, Harvard Business School professor John Quelch stated in a frequently cited The Financial Times of London article that “This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”
The brands he was speaking of included the likes of GE, Disney, HP, Kellogg and Microsoft, all of which owe much of their success to humble beginnings in the midst of a recession. And not just any recession – the ‘Great Depression’ no less. Using data provided by Rod Polasky with archaeolink.com, Dave Chase wrote one of the definitive articles on brand success amidst recession or worse. In ‘How brands thrived during the Great Depression’, he describes a fascinating history on these now very recognizable brand names who owe their success in part at least, to marketing during periods of economic upheaval. “What do GE, Disney, HP and Microsoft have in common?” he asks. The answer: “They were all startups during steep declines in the U.S. economy. GE started during the panic of 1873, Disney started during the recession of 1923-24, HP began during the Great Depression, and Bill Gates and Paul Allen founded Microsoft during the recession of 1975.”
How did they do it? They looked upon the depression of their time as an opportunity, the ultimate competitive advantage. As Chase explains, “It was a time when several companies benefited from aggressive marketing while their rivals cut back. A good example of that would be Kellogg besting C.W. Post during that time. Consumers didn’t stop spending during the Depression; most just looked for better deals, and the companies providing those better deals” – and, importantly, boldly advertising those better deals, albeit on a different stage at that time (i.e., not online) – “came out stronger after the Depression ended. When spending picked up, consumer loyalty to those companies remained.”
Kellogg. HP. Microsoft. GE. Disney. All giants in their field. All brands who continue to stand the test of time and financial uncertainty. Just remember their names every time you feel tempted by budget constraints to cut back on your marketing spend, delay search engine optimization, or minimize digital marketing efforts. They refused to fade out of sight by eliminating their advertising or marketing spend, and thus when the bad times ended – and they always do – they were still in the spotlight, with their competitors either relegated to the shadows or completely disbanded.
2. Do the opposite of your competition
While we’re all for analyzing what your competitors are doing and, where relevant, copying them (only making your version so much better), this is one of those instances where we urge you to ignore everyone around you.
As our history lesson above has proved, cutting your marketing budget in a recession can do little but relegate you to the shadows, or worse. Fortunately, not everyone is inclined to do historical research, which means that many of your competitors will continue to cut those budgets. The result? Your opportunities for marketing successfully during a recession are blown wide open.
Of course, today ‘marketing budget’ is increasingly synonymous with ‘online marketing budget’. Nowadays, when people are searching for better deals, they are doing it online. (So much easier and more efficient than reading junk mail flyers or browsing through phone books, catalogs, newspapers or magazines!) So, when all around you are slashing online marketing spend, do the opposite of your competitors and seize your greatest marketing opportunity yet. Which leads us to…
3. Do keep your marketing budget on course
In response to previous recessions and the 2008 crash specifically, the UK-based IPA (Institute of Practitioners of Advertising), produced a 2008 report on marketing during downturns. Their key finding? “It is better to maintain SOV (share of voice) at or above SOM (share of market) during a downturn: the longer-term improvement in profitability is likely to greatly outweigh the short-term reduction.” Even better: “If other brands are cutting budgets, the longer-term benefit of maintaining SOV at or above SOM will be even greater.”
Translation: maintain your visibility in the market during a recession when everyone else is essentially invisible, and you’ll be the one everyone remembers when the dust settles.
Maintaining a brand (your brand) that consumers can see, recognize and trust, even in the darkest of times, is one of the best ways to survive and thrive when the economy gets a bit dark and twisty. Not only do marketing cutbacks remove you from the equation in the moment – out of sight, out of mind and all that – consumers may very well feel abandoned altogether. They will associate your brand with one that cannot be trusted to provide them with what they need, when they need it. This feeling of mistrust will linger long after the recession has ended and they are back to spending money… with your competitors who didn’t abandon them.
We’re not saying you shouldn’t look closely, and objectively, at your marketing budget and amend and adapt to fit the moment. We’re just saying don’t go with that gut reaction to cut it altogether. Instead, look at things like where to promote and what to promote.
- Market in the places where your consumers are actively looking for your products or services.
- Keep in mind that price and value become ever more important in a recession market. Financial anxiety means your consumers are looking for deals – even if only on an emotional level. Where possible, without diminishing your brand integrity and quality, offer them just that. Temporary price promotions; significant savings; redeemable, actually worthwhile loyalty points; buy three get one free… offering more for less in an anxiety-ridden financial climate shows you care.
4. Do think like your (existing) customer does
Remember this: if a recession is a worrying time for your business, it’s an equally worrying time for your customer. They too are feeling the pinch, the fear of where their hard-won dollars are best spent, dollars which must go further and buy more, but mean less.
Your existing customer base, how they are feeling, and how they respond to the recession, and your brand within that time, can be your biggest salvation. By focusing on them and making sure your marketing strategies are geared to making your most loyal fans feel supported, rewarded and happy, you will get the support and reward back. You can do this in a number of ways:
- If you can, emphasize the ‘local’ aspect of your product. ‘Made in Canada’ equates to supporting a flailing home economy, at home.
- Give your customers more control by offering things like interest-free payment plans, differently priced options for the same offering, discounts for longer-term commitments.
- Keep frills and frippery out of it – a recession is no time for celebrating frivolous purchases. Make your consumers see real value in everything you do and offer.
- Give clear, legitimate reasons that allow buyers to feel that they can afford your offering – both financially and emotionally (i.e., they feel they deserve it and need feel no guilt for spending money with you).
- Offer rewards, along with sincere thanks, for loyalty.
5. Do adapt
Keep your core brand, product and offering the same as it’s always been – high-quality and trustworthy, even when discounted – but learn to adapt according to the financial times and consumer mood (which equates to consumer spend).
You can adapt by offering, for example, different sizes of a core product, with different pricing plans. But keep that product the same. Take the case of Unilever and its Skip laundry brand. During the economic crisis of 2002 in Argentina, Unilever made it possible for their consumers to continue to buy the Skip laundry brand they had come to know, love and trust, in spite of financial burden, by offering multiple size and price options. Small packages which carried a low unit price were introduced, as well as large economy packs that offered a better deal for those who could afford the bigger price tag up front; this spoke to multiple layers of their consumers at their level of spending comfort. They adapted to suit different ways of spending and rationalization. They adapted.
Stay strong. Stay true. But do adapt. Bend so as not to break.
Recession Marketing: What Not to Do
Don’t think too short term.
Don’t slash and burn your marketing spend.
At risk of going all Pollyanna on you, and without trivializing the potential impact of a recession, it’s important to remember that this too shall pass. When it does, you don’t want to be left picking up the (slashed and burned) pieces of what was once a rock-solid brand presence thanks to a carefully thought out marketing plan.
A recession – no matter how big or small – is the opportunity to step up and be seen, especially when others are retreating into the shadows. Market wisely. Market strategically. But market you must.
For more information on how to boost sales in a tight market (or full-blown recession) with savvy digital marketing strategies, contact 1st on the List today by calling 1-888-262-6687 or email us at firstname.lastname@example.org.