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Marketing’s Role during an Economic Downturn

With months of economic uncertainty and an anticipated recession during the course of 2023, it is only natural for business owners and executives to feel worried. Recessions have proven to cause a lot of hardships over the years, leading businesses to adopt cost-cutting strategies. One knee jerk reaction to an economic downturn is to cut down on the marketing budget. History shows us that this strategy might not be the right one to adopt.

Cutting down on the marketing budget might ultimately mean reducing sales and revenues, accelerating the problems brought about by the downturn. As the world navigates through periods of uncertainty, we discuss with Simon Attard, the Founder and CEO of MYC, the role that marketing can play during phases of economic turbulence.

Advocating advertising

Research and data do support advertising during recessions and economic downturns. In certain cases, businesses that increased advertising saw better profitability results than those which cut down. When hit with an uncertain landscape, many companies fall into the trap of cutting their media spending. Considering the necessity that marketing is today, reducing advertising investment can bite back in the long-term. Marketing is an important component to stay in business and maintain visibility with target markets. In this respect, it is important to think ahead and beyond the recession.

Focus on return on investment (ROI)

ROI is the name of the game and during an economic blip, this could not be emphasised enough. When every Euro spent counts, it is important to analyse the ROI of the various marketing activities. Those activities that yield the highest return should be focused upon the most. This can only be determined through numerical data such as cost of customer acquisition figures. When it comes to ROI, executives cannot reply on assumptions, but need to justify their reasoning and proposed marketing investment through figures. The data will ultimately determine what to focus investment on versus what to scale down.

Testing

Experimenting with different marketing strategies will enable businesses to learn what works well and what may be less suitable for their sales and revenues. An economic downturn should not hinder testing, as it is what drives marketing success and key learnings. Similar as to why a recession is not the right time to trim down on advertising budget, it is surely not ideal to stick solely to the status quo and cease testing. We have learned from the pandemic that opportunities can come about even in the most difficult circumstances. In marketing terms, businesses should never steer away from testing out new messaging strategies, channels and tactics. This does not mean that businesses should undertake dramatic changes during uncertain times.

Adaptability

When global economies face recessions and instability, adaptability is key. Companies that are flexible and fast may end up thriving where other organisations that might have been perceived to be more stable close their doors. Priorities surrounding the business, marketing and customers may change fast and hence strategy, projects, tasks and day-to-day activities would need to shift to align accordingly.

Utilise established strategies

Just because a business may be navigating through an economic downturn or a recession, does not mean that the basics should be abandoned. During such testing times, businesses need to invest in marketing methods that have proven to be successful over the years. Organisations should consider experimenting with organic posts across different social media platforms which can attract attention and drive traffic to their websites. Finding ways to leverage organic posts might help to reduce the expenditure of paid advertisements.

One other strategy is to invest in content creation, which in turn can also drive traffic. Good content delivers valuable and useful information, casting a positive light on the products and services offered. It can also be used to create engagement from existing and potential customers.

Keeping in touch with the community is of vital importance. One example is by maintaining communication on Facebook groups. When a business engages directly with followers, they will feel that they are being heard and that they matter. Another way to do this is by sharing live videos on Facebook and Instagram, which are engaging and do not require significant investment. These platforms can give businesses the opportunity to showcase their existing or new products in a cost-effective, yet engaging way.

A cost-effective initiative which has always been associated with high ROI is that of email marketing. During periods of a recession, the existing customer base can guide a company away from trouble. Recessions are a good time to show customers that they matter and providing them with beneficial and customised offers can go a long way.

When faced with difficulties and challenges, which are normal throughout the course of economic cycles, it is quite easy to fall into the trap of making panicked decisions which ignore the long-term repercussions. The right marketing strategies will allow you to maintain the relevance of a business whilst trimming expenses. During troubled times, it is important to keep in mind that business is not just about surviving. It is about thriving.

If you would like to learn more about marketing’s role during a recession or economic downturn, get in touch with Simon and the team by sending an email on [email protected]

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