In April 2020, the United States went through a brief recession due to the start of COVID-19, which was followed by economic expansion across numerous industries. Due to ongoing supply chain problems, rising interest rates, inflation, and the conflict in Ukraine, the economy has slowed down in 2022.
Many speculate about whether there will be another recession due to these and other issues. If not, are we on the verge of one? So how do marketing and advertising change during a recession? What, more crucially, can marketers do to stay competitive throughout a downturn?
What is a Recession?
A recession is defined as “a considerable fall in economic activity distributed across the economy, lasting more than a few months or quarters” by the National Bureau of Economic Research.
Certain recessions persist longer and have a considerably more significant impact on the economy, like the Great Recession of 2008. As companies lost faith in the economy during the 2008 crisis, ad expenditure in the US fell by 13%.
How Does a Recession Affect Marketing?
A recession’s immediate effect is a decline in consumer confidence. An individual’s available income and discretionary income alter during a financial slump. As a result, this changes how people shop and decide what to buy. Customers are more careful with their spending, investments, and buying habits.
Luxurious, more expensive purchases are put off or swapped out for sensible, budget-friendly alternatives. Businesses will be more pressured to show a return on their marketing investments. Advertising and marketing activities must be more targeted than ever before.
Furthermore, as marketers attempt to address a lack of customer confidence, value-based marketing will become even more crucial. Many businesses will change their marketing strategies from “growth at any cost” to “show me the ROI.” Companies will have challenges during recessions, and their marketing initiatives must adapt to the tide of economic change.
How to Market Effectively During a Recession
For businesses and marketing, a recession may be challenging. Yet, in reality, it needn’t be! By using a few efficient marketing techniques like the ones listed below, businesses can prosper throughout a recession.
Increase or Sustain Marketing Efforts
Many businesses cut spending, particularly on marketing and advertising, to conserve money during recessions. As a business owner, stay away from this temptation.
Companies that successfully recover from recessions typically increase their marketing expenditure rather than cutting it. Suppose all of your rivals are slashing their marketing spending while your company is honing its strategies. In that case, you will get a greater market share by being more aggressive.
When rivals reduce their spending on advertising, customers will come across your company’s messaging more often than ever before.
You can enhance your capabilities in paid search, social media marketing, and other organic digital marketing mediums. The economy may not be ideal, but organic search marketing is still a viable strategy for expanding your consumer base and increasing revenue.
Promoting your business through digital channels and social media helps raise brand recognition among your targeted audience.
Make Marketing Campaigns More Targeted
Marketing and advertising are more effective when directed toward a specific audience. Highly focused marketing is crucial in tough economic times when every dollar counts. In fact, you might need to adjust your focus to reach a certain subset of your audience or perhaps a brand-new sub-niche.
To get the most out of your marketing budget, you focus on maximizing the effectiveness of your content marketing campaigns. In addition, time your campaigns for when you and your readers will benefit the most. Make your marketing messaging engaging, relevant, and unique.
Make your marketing messaging engaging, relevant, and unique.
It’s crucial to market to current customers at this time. Existing customers may be leveraged to drive sales at a far lower cost than new customers. Spending can be reduced without lowering the marketing budget if current customers are prioritized. The benefits will accrue to your company even when the economy worsens.
Focus on Value-Based Marketing
As we have mentioned, value-based marketing helps boost customer confidence. Although it seems apparent, it becomes considerably more important during a recession. With value-based marketing, businesses promote a product or service based on the benefits it offers to the customer. Understanding your customer and communicating how your product will meet their needs is essential to this strategy.
Analyze past (and current) metrics
Performance metrics can show whether or not your company is on track to accomplish its objectives. These measures can help develop strategy and serve as early warning signs if marketing plans are off track. Keeping track of performance metrics is especially critical during a recession. The combination of historical and current data will enable businesses to invest marketing budgets in areas that have proven to succeed. It will also help assess whether these areas are still effective.
Add Value to Your Marketing with Meaningful Content
During a recession, marketing content should represent the issues that customers experience on a daily basis. Customers want to see businesses demonstrate unity and empathy. Your brand must send a good message that corresponds to the mood of your target audience. Messaging should be encouraging and empowering, helping create a strong emotional connection with your customer.
‘During a recession, successful brand advertising demonstrates to customers that a company cares about them as individuals, not simply as a market.
It may be tempting to reduce your marketing budget in difficult economic circumstances. However, research (and history) demonstrate that businesses that raise their marketing investment benefit greatly during economic downturns. Targeted and value-based marketing strategies are an inexpensive approach to keeping your brand visible during a recession.
Yes, most marketers are uneasy when they hear the words “market slump.” However, this might be a major opportunity for business expansion. Business owners just need to be strategic, proactive, knowledgeable, sympathetic, and fearless in their approach.