Whenever there’s talk about an economic downturn, or even a recession, the commercial conversations usually turn the subject of marketing and, more specifically, speculation about reducing marketing spend.
It happened during the financial crisis of 2007-2009 and again during the time of the worldwide COVID pandemic starting in 2020. Business owners considered ways to reduce costs, and the media amplified the talking points.
Marketing is often the first consideration during these times because there’s a misconception that marketing is an “extra” or a channel where firms can instantly save money.
But as Henry Ford once said:
“The man who stops advertising to save money is like a man who stops a clock to save time”
Of course, it’s good business sense to analyse the commercial landscape and take stock of what the market is doing. When times are tight, consumers reign in spending on non-essential items first. But that leaves plenty of essential areas where spend continues.
Here, we look at the reasons why cutting your marketing budget requires careful consideration…
1. Publicly Signalling Confidence
It makes commercial sense to look at the figures and see where you can make savings. However, if you’re a dynamic and proactive business with a strong marketing strategy and high visibility, then any sudden drop in marketing activity is potentially a very public signal that you’re in distress.
This is a subtle but very powerful indicator that you may have limited cashflow, a downturn in business, or lack confidence. It’s a signal to your customers and your competitors too, so you should consider very carefully the public-facing results of a cut in marketing.
If you’ve managed your business well, have a good pipeline of potential orders, and are confident in a downturn, then continuing your marketing activity is a strong statement of intent.
2. Maintaining Brand Presence/Awareness
If, on the other hand, it’s your competitors who are in distress, for those very same aforementioned reasons, then continuing your marketing activity may afford you an even greater competitive edge than you already enjoy.
Maintaining brand presence with less competition means that your brand awareness will get a boost as there are fewer rivals in the marketplace.
Furthermore, studies have shown that positive brand sentiment takes the greatest reduction when marketing is cut.
3. Cost Advantage
With fewer rivals advertising, certain marketing channels will “open up” and you will have an opportunity to not just dominate with your brand but benefit from better ad costs too.
Your PPC channels, for example, could have fewer competitors and that will have several advantages including taking more of the ad share (increasing your brand awareness) and reducing the cost of ads (They will be cheaper with fewer competitors bidding for the same keywords).
Talking of costs and prices, be careful not to increase prices of products or services if sales revenues do decline. Recessions make consumers more price sensitive, so increased prices will not be considered favourably.
Also, any later discounting to counter initial price increases can be viewed with cynicism, so steady on the tiller with your prices, maintain them.
4. Keeping Up Momentum
Brand awareness is one benefit from keeping up marketing momentum, as your competitor numbers may reduce.
Research has also found that marketing during a downturn can place businesses in a better position once market conditions improve.
With all the factors we’ve discussed so far, if you’ve maintained price and increased market share, once the sales environment is “back to normal” you’ll have a distinct advantage. Businesses that survived and even thrived during a downturn are in prime position to seize new opportunities.
5. Retainers Are More Than Just Marketing
For businesses without in-house marketing resources, outsourcing to a digital marketing agency has many advantages. The monthly retainer here at Clever Marketing is a great way for firms to secure talents that they may not have onboard.
Additionally, a digital retainer gives companies access to a wider pool of resources, especially when it’s a full-service agency.
Most of our clients retain us for SEO, PPC, or web design services. However, they can also benefit from website hosting, maintenance, web development, graphic design, social media, copywriting, content creation and content management, email campaigns etc. The list is almost endless.
So, if your firm wants to reduce it’s PPC spend, you could supplement that with content and SEO, add some digital brochures to your portfolio, and direct potential new clients to those.
It may be instinctive to reduce marketing spend as it’s so often misunderstood and undervalued.
However, with Clever Marketing, we are one of those rare agencies who demonstrate return on investment. Your ad spend must get results and that’s all we do – we increase your brand awareness, improve site health, search engine rankings, and those all-important leads – be they emails, calls, or full orders.
Clever Marketing is a full-service digital marketing agency with marketing strategies that work in a downturn.