Brighter Messaging
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Here’s what happens when you cut your marketing budget during a recession

With the economy sending mixed signals and businesses feeling skittish, it’s natural to look for ways to cut costs in your business. Sometimes these efforts can yield positive results that make the business stronger in the long run. But hear me out—marketing spend isn’t the thing to reduce when business slows down. Before you cut the marketing budget due to a recession (or fears of one), consider the long game.

Scaling back on marketing efforts can have significant and long-lasting adverse effects on your business, undoing years of investment and hindering your ability to regain market position, search engine position, and social engagement. Here’s why, come spurt or slump, maintaining (or even increasing) your marketing budget is crucial for long-term success.

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The harmful impact of scaling back on marketing

Research by Nielsen revealed that brands that reduce their marketing activities during a recession can lose 2% of their long-term revenue each quarter. Add lost market share, relevance, and customer loyalty, and you can see why trying to bounce back after marketing budget cuts can be brutal.

Here are some of the negative effects of slashing your marketing budget:

You silence your voice

Regardless of the mix of marketing tactics you have in place, reducing your efforts is going to reduce your reach. Worse yet, you’ve just given your competitors an opportunity to fill the void you’ve left and remain at the forefront of customers’ minds.

McKinsey shared an example of a company that capitalized on the quiet of its competitors. Instead of cutting back on advertising during the early stages of the COVID-19 pandemic, United Airlines launched its largest ad campaign in a decade. United’s bold strategy paid off, as it stood out at a time when other airlines were scaling back. By maintaining a strong marketing presence, United positioned itself for growth as its customers came back to the skies. The strategy not only resulted in increased brand awareness, but also contributed to more flights and long-term growth of their customer base.

As you make decisions about whether to cut or reallocate resources for marketing, keep an eye on what your competitors are doing. You don’t want to inadvertently invite them to adopt your customer list.

You lose market position

Rebooting marketing efforts after a period of inactivity can be a struggle. Brand awareness, search engine performance, and overall visibility don’t simply happen on their own. Rather than letting everything slip, we recommended staying consistent, even if it means scaling back a little. For example, if you were doing a weekly blog post, you could change the schedule to a bi-weekly or monthly frequency. Sure, your audience (and Google) prefer to see a new piece of content every week, but putting out one a month is better than falling off the radar completely. You’ll also be producing new content that you can use for emails and social posts. Staying consistent through a recession helps you avoid the need for a dramatic comeback and maintains a steady presence that keeps your brand active.

You lose touch with your target audience

It takes time and effort to grow an online community; when you stop the flow of content, you eventually get to a point where you lose traction with your audience. When customers stop seeing your brand consistently in their preferred marketing channels, it erodes their sense of familiarity and trust in your brand, which can negatively affect their future buying decisions and referrals.

Although an economic downturn may cause customers to alter their spending habits, there are two things to keep in mind:

  1. Nothing lasts forever. Even the relatively short time period of the last 20 years offers loads of examples of economic downturns and subsequent upswings.
  2. Your market may be shifting. Whether you’re selling to businesses, consumers, or both, it’s worth remembering that you aren’t the only one rethinking your finances. You may have an opportunity to move up market or find new ways to serve existing customers.

Maintaining a strong marketing presence ensures that potential customers can find and choose your brand over competitors. Even if your focus may shift from immediate sales to long-term brand loyalty, marketing remains essential for attracting new customers and retaining existing ones.

In fact, a recession may even present an opportunity to strengthen relationships with your target audience. You can use your marketing channels to address their concerns, provide valuable information, and demonstrate your commitment to customer satisfaction—all of which help to build trust, loyalty, and long-term customer relationships.

Cuts to marketing budgets during a recession are ultimately more harmful than helpful

Research has consistently shown that companies that maintain or increase their marketing efforts during a recession are better positioned for long-term success. That’s ultimately why we advise clients not to see marketing as a discretionary or non-essential cost, but as a necessary investment in your business growth and success (yes, even through challenging times). It generates sales, attracts new customers, and builds brand equity.

Resist the urge to scale back on your marketing efforts and invest wisely in building your brand’s online presence and customer relationships. Look at marketing as an investment in the future success of your business; by staying the course, you ensure that your brand remains strong and competitive.

That being said, it’s crucial to take a strategic approach to your marketing budget. Focus on activities that deliver a strong return on investment and align with your business goals. This may involve reallocating resources to more efficient and targeted campaigns that reach the right audience at the right time. By strategically investing in marketing, you not only weather the storm but also position your business to seize opportunities and gain market share when economic conditions improve.

Start with these 7 actionable tips to improve your marketing during economic uncertainty.

If you need some support and want to learn more about marketing your business during economic uncertainty, get in touch with the Brighter Messaging team. You may be surprised to learn that it could be more cost-effective for you to outsource your marketing efforts than it is to cut the marketing budget during a recession.

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