Recession Proof Marketing

There is a lot of discussion around a potential economic recession within the next few years. How will it impact your business and what should you do about it?

Unemployment rates dropped in 2022 compared to 2021. Inflation continues to drop and even though interest rates are still high, they are slowing down as inflation decreases. The data shows we are headed in the right direction, but it may be some time before we get there. Until then, it is important for operators to remain diligent and resist short-term solutions at the cost of long-term gains. Here are some recommendations to build a recession-proof marketing plan.

During a recession, proving the ROI of marketing becomes even more important. Measuring marketing’s impact is something marketers should always be doing, but when CFOs or CEOs are looking at reducing expenses during economic slowdowns, marketing & advertising budgets are usually at the top of the list. Being able to provide data that supports sustained marketing efforts could position the company to outperform its competitors during the recession and maintain the customer loyalty needed to carry the business through the recession.  According to Greg Blazewicz, CEO and founder at SALESmanago, “Marketing faces a perfect storm as business heads into recession. But instead of accepting its demise and being side-lined, teams need to prove they can get even closer to customers and encourage loyalty that will help their brand get well positioned for better times. A marketing revolution needs to happen, and quickly.”

A sixty-year study conducted by Marketing Science Institute in 2012 found that “Proactive marketing in a recession leads to improved business performance.” Reduced marketing activity from your competitors creates an opportunity and space for you to fill. During an economic downturn, this strategy can move your casino ahead of your competitors. According to an eight-year study by consulting firm Bain & Co. that analyzed the net profit margins and sales of more than 2500 companies, about 24% more firms moved from the back of the pack to a leadership position in the 2001 downturn compared with the subsequent period of economic calm. When you reduce marketing efforts to save money, then see a reduction in revenue, is the reduction a result of the recession or reduced marketing efforts? Would continued marketing efforts mitigate the amount of reduced revenue?  There are factors in addition to marketing like industry and geography that play a role, but studies consistently show the positive impact of marketing during a recession.

Resist the immediate temptation to reduce marketing budgets. Reducing budgets may provide some short-term relief and help hit revenue goals but short-term gains can become long-term losses. It has taken time to build your brand and your customer base, and for your messages to resonate with your customers. The time and investments it took to build your brand can quickly unravel because of reduced marketing efforts and when the economy picks up it can be costly and take time to get back to where you were. According to ANA CEO Bob Liodice, “On average, video performs better when considering longer-term impacts and multimedia campaigns tend to have a higher ROI than single media campaigns. Brands that increased investment during the last recession saw 63% stronger ROI and 60% ROI grew year-over-year.” Now is the time to focus on video ad content. Short-form video content is currently the leading marketing tool for almost every industry. Ensuring your marketing campaigns are consistent across multiple forms of media increases their impact for long-term success.

Find opportunities to improve and become more efficient. Every situation can yield positive and or negative outcomes. Although a recession is not positive for businesses, it can present opportunities if you are willing to look for them. Find the opportunity to become more creative, innovative, and efficient. Examine your processes and evaluate your marketing spend. Without reducing your total budget, are there more efficient ways to spend your advertising or marketing dollars? For example, is there an opportunity to move some advertising spend from print or outdoor to digital or OTT?

During a recession, the costly effects of employee turnover are amplified. Retaining talented employees becomes critical. Ensuring you are investing in the skills of your employees by providing training and pathways for advancement may be the difference between keeping talent and losing it. In addition to investing in employees, it is also important to invest in emerging technologies. Advancements in technologies can improve efficiencies and reduce costs. Targeting, tracking, and measuring marketing campaigns are now easier than they have ever been and are continually improving. Artificial Intelligence (AI) is also changing the way we develop marketing and advertising campaigns. For example, Dynamic Creative Optimization is an AI technology that can rapidly build multiple iterations of an ad using the same creative base while personalizing the ad to different audiences on large scales.

Are you prepared for the anticipated turbulence over the next few years? For more information on ways to improve existing marketing campaigns during a recession, Catalyst Marketing agency is here to help. Contact us at teamcatalyst.com.