Article written by Julie Gorham with contributions by Cheasanee Hetherington
When the economy slows and business halts, owners feel the pressure to reassess every expense. Marketing often lands at the top of the “cut list,” especially when income dips and ROI feels uncertain. And while cutbacks may be in order, taking no action at all opens the door for lost market share and revenue. Once you lose customers, it is very difficult and expensive to win them back.
While recessions present financial challenges for most businesses, they also present sales and market share opportunities for market leaders. History, combined with our 15+ years experience at Marketing EQ demonstrates that cutting visibility during a downturn can be a silent killer for long-term growth. In this article, we aim to provide some guidance on how to pivot, not go silent, when finances become squeezed.
The Power of Showing Up When Others Step Back
“Stabilization, not stifling, is the best way to endure during a recession. In past downturns, many companies that increased advertising spend captured market share from more conservative rivals.” – Danny Shepherd, Titan Growth, 2022
If you have growth goals for your company, here’s why maintaining or increasing advertising in a recession may be the ticket:
According to Critical Review and Synthesis of Research on Advertising in a Recession by Gerard J. Tellis and Kethan Tellis, April 16, 2009, there are a number of arguments for and against advertising in a down economy, but the evidence weighs in favor of advertising. They reviewed all the available research for advertising in recessions from the early 1900s to the mid 2000s. They also published the tables and the methodologies used for each study, which we reviewed. What they concluded was this: companies that maintained or increased spending during a down economy averaged roughly 7% growth during and after the recession. Those that did not spend on advertising during the same period saw little to no growth, including two to three years that followed. The gap between those that did and did not advertise was between 20-25%. This means those who advertised captured roughly 22.5% market share in their local market, or 1/5 of their market. Are you ready to stand out?
Observation
One Local Company that’s making quick shifts
Just as our team began researching this article, I received a direct mail piece from a local Toyota Dealership. Funny thing, I have owned my new Toyota for a little over a year. I would expect this postcard in a few years. But, with diminished access to new inventory and the political issues surrounding exports, it made total sense. We commend their quick pivot to keep inventory up, even to the point of soliciting existing buyers for new cars – a fine example of course correction in tough times.
Shifting Your Focus To Strengthen Your Position
Market dips affect nearly every sector, and reduced spending is a natural result of attrition. To both stabilize revenue and capture market share in unique market conditions, we’re offering some adjusted strategies to consider.
In a thriving market, the typical market focus for clients, based on our own empirical data of 15 years, includes:
- Finding new prospective customers
- Follow-up with interested or prospective customers
During a recession, modifying priorities with a focus on stabilization first, then expansion requires a more focused effort:
- Nurture existing customers – Added value offers to re-engage, or seek referrals (warm leads)
- Connect with disengaged customers – Improvement and special offers
- Existing market share – Offer added value not offered by your competitors
- New Markets – An opportunity to establish long-term brand equity with those who need services but haven’t purchased before
It’s five times more expensive to acquire new customers than re-engage existing customers. When sales are a bit slow, this is a good time to evaluate disengaged clients, including the role your company played in the disengagement. Cleaning up your sales list and assessing past account activities may create opportunities for sales improvement and re-engagement (sales.) Customer clarity is important and is a good exercise when considering new growth strategies.
Now let’s break down the considerations and 360 review of marketing during recession, and the opportunities that may be worth your pursuit – if you are up for it. What are the risks, and what will they cost you? Or, what will they cost you, if you don’t take action?
Recession Plan Thinking – Where are you?
Defensive Mindset & Result
- Focused on cutting and pausing ad expenses
- Minimizing all risk and sidelining sales
- Attrition in visibility leads to shrinking market presence and lost momentum
Offensive Mindset & Result
- Curtails reckless spending
- Focused on highly targeted actions
- Market visibility positions the brand as stable, confident, and trustworthy
RECOMMENDED TACTICAL ADJUSTMENTS
Negotiate Premium Ad Space
- Lower ad costs: In quieter markets, visibility is more affordable and ad space is more plentiful
- Less competition for attention: Even modest marketing investments work harder
- Brand-building opportunities:
A consistent presence signals stability, which matters most during uncertainty
Grow your connections
- Stay connected with personalized email campaigns to customers
- Network and make new connections. Be proactive, join a group, and advocate for your company to create more exposure
- Offer loyalty rewards or exclusive perks for repeat client purchases. It might be a lot of work, but it will be worth it
Strengthen Long-Term Visibility
- Continue sales efforts, even if business is slow
- Publish content that solves problems and educates your top markets
- Invest in organic SEO so your audience finds you when they’re ready to buy
- Adjust your messages – Less aspirational, more value
CONSIDER COST-EFFECTIVE ADVERTISING OPTIONS
Premium Exposure
- Lower ad costs: In quieter markets, visibility is more affordable and ad space is more plentiful. Don’t be afraid to negotiate
- Less competition for attention: Even modest marketing investments work harder
- Brand-building opportunities:
A consistent presence signals stability, which matters most during uncertainty
Best -Value Considerations
- Digital display ads are highly targetable and most affordable – $1,000 campaign can reach 100k people
- Digital ads reach people who know you, and those who don’t: Geofencing, Behavioral, Search, Social, and CRM.
- Ensure you get big reach for mass awareness – You’ll need to reach more people since fewer people are buying
- Create focused ads for those ready to make a purchase
Final Notes: Mistakes to Avoid
Don’t go completely silent. Letting your budget sit idle instead of investing in high-ROI activities can have a longer-lasting impact. During difficult financial times there are marketing predators who offer quick fixes – don’t buy into it! Instead of chasing trends, build a strong strategic plan. Your business will thank you.
Your Next Step: If you’re facing tough marketing decisions in today’s economy, we can help you build a smart, cost-effective strategy that works now and in the long term. Thanks for reading this. Let us know if anything you’ve read here has helped.