With inflation at an historic annual increase — the highest in 21 years — and an inflation rate that hasn’t yet peaked, it’s natural that businesses are looking to ‘bunker down’ – survive an uncertain period and emerge from it on the other side in a good position.
It’s a task easier said than done. So how does a successful brand turn an uncertain period to their advantage?
While a brand’s first instinct might be to pull back on spending in every sector, taking a panicked or knee jerk approach to your marketing budget may end up doing you more harm than good. Not only that, but avoiding marketing spend during a period of economic downturn can mean missing the chance to capitalise on the disruption of business as usual.
And before you start throwing money at the problem in a wild spending spree, let me be clear. Investment in marketing during economic uncertainty is less about splashing cash, and more about choosing the right channels that will effectively target your core customers.
Here are my top 3 reasons why your marketing budget is actually important when markets lose confidence.
3 reasons why your marketing budget matters during a recession
1. The competitor landscape is changing
There’s no doubt about it, bear markets have an effect on budgets and spending. But they can also pose a potential for growth. As larger corporations take their foot off the accelerator and scale back marketing expenditure, you can seize the moment and grab a larger share of the market. Observing the competitor landscape is key too, as it will give you insights into your own strategy. Most importantly, don’t be afraid to get noticed or become part of the conversation while this gap in the market opens up — it’s up to you to take advantage.
2. Consumers are still buying, but their choices are more considered
As customers tighten their purse strings and wait to make big purchases, your top of the funnel marketing becomes essential. Evergreen content marketing that positions you as a trusted authority in your industry is going to be more important than ever. The beauty of producing high quality content is that unlike channels with a strict cost per acquisition, your investment is not lost over time. In fact, the more authoritative content you produce, the more you’ll be rewarded — both by Google and by customers who feel a sense of loyalty and trust with your brand.
3. You’re playing to win the long game
Business and brand are terms often used interchangeably, but there’s a reason we marketing people use the word brand so much. Branding reaches beyond your short term bottom line, cutting to heart of your emotional resonance with customers, what you stand for, and how you define yourself in opposition to the competition. What’s your legacy? What will your brand do in response to an uncertain moment? Withdrawing completely from marketing channels isn’t going to stand your brand in good stead for whatever period comes next, and it could mean you lose ground to competitors that can be almost impossible to claw back.
By focusing on marketing channels that target your changing customer demographics and focus squarely on the long term success of the business, you’ll be able to use economic uncertainty to your advantage. Performance marketing may take a back seat — but this change has been on the cards anyway — performance marketing ain’t what it used to be. In its place, invest in marketing that builds on your brand and propels your forwards to meet new challenges.
Judge your investment by the quality of your returns
So, how do you make sure that the marketing channels you’re investing in actually yield good results? Unsurprisingly, the answer lies in solid data.
Ditch the wishy washy metrics and choose creative avenues and solutions that can be backed by solid, measurable results. Focus on channels with a high lifetime value, and be confident in pulling the plug on spending which just isn’t producing a return on investment.
With total ad revenue from Google and Facebook dropping significantly, now is a good opportunity to get conversions for less. Maintaining this activity signals you’re a business that can last through tough times, and not just coast when the going is easy.
Remember, your target customer may change significantly during a period of economic downturn, so don’t be afraid to let old channels go in favor of those that meet your current consumers head on. If a channel isn’t delivering, it’s better to put it out of its misery than prolong the pain.
Be bold, be brutal, be honest
Whatever may be happening in other departments, you’re going to have to invest in your marketing team (whether they be internal or an external agency) in order to keep meeting the challenges an economic downturn presents.
With a confident strategy and some good old fashioned enthusiasm, a depressed market can suddenly turn out to be the opportunity your business needed to jump forward into its next phase of growth.
If there’s one thing above all else I’ve learned from advising thousands of clients on their marketing strategy, it’s that honesty wins at the end of the day. Stay honest about what’s working and what isn’t, and don’t fear creative or unexpected solutions to problems. With a clear eyed, honest investment strategy in your marketing budget, you’ll be ready to emerge from a bear market and grab the bull by the horns.
Andrew Raso — CEO & co-founder of Online Marketing Gurus.