Making a Case for Retaining Marketing Budget in a Recession

We’re no stranger to a recession and the effects of inflation, rising costs and tightening purse strings. As everyone starts to feel the pinch, consumer behaviour changes significantly, and consumer spending falls in line with limited pennies to play with.

Spending patterns change and people begin to retreat inwards – spending less on days out, outdoor experiences and nights away, but consuming more at home. Studies show this trend happening across industries: home entertainment such as video games, books, and music, as well as groceries and alcohol.

COVID-19 has also made sure we’re no stranger to staying inside either. With the economic uncertainty around the pandemic, consumer spending plummeted overall. In fact, McKinsey research shows that UK consumer spending dropped more in the COVID pandemic than it did during the 2008 recession.

This comparison shows the impact circumstance can have on consumer spending. And it also shines a light on how consumer behaviour can change so drastically, and not go back to exactly how things were. Brands that didn’t evolve during this period of inertia were out of luck, leading to administration and bankruptcy.

Let’s look at how online shopping during both the 2008 recession and the COVID pandemic spiked. Brands who thrived were the likes of Amazon and Shopify. Those that didn’t, like Debenhams, failed to pivot, having to close all their 124 stores as a result.

Brands who rode the trends of the pandemic grew their profits with their agility. Sofa.com realised that the home needed to be people’s sanctuary more than ever, which spawned a wider range of affordable sofas in a matter of weeks, and a new garden furniture range.

Brands who fail to adapt miss this one key component: agility.

Agility is a term synonymous with every business department, but its success is most seen in marketing. Where does their data come from? Marketing. When brands pivot and ride consumer trends, where does the research and the promotion come from? Marketing, again!

To answer this, let’s go back to marketing basics. What makes great marketing? Firstly, the consumer has to have an excellent experience that’s better than your competitors. Around 65% of millennials are willing to pay more for a better customer experience. What’s more, brand loyalty is never more needed than in a recession.

Secondly, you need to be delivering quality content to the right person, at the right time, with automation. Consumer behaviour won’t influence the foundations of marketing, but simply change what’s delivered, and who to.

Marketing shouldn’t grind to a halt when times are tough, for this very reason. Here’s how you can retain your marketing budget:

Forbes notes that in a recession, the hype around your product can dwindle. Because of your competitors reducing their ad spend, it leads to a downturn in overall ‘noise level’. Typically, companies would re-position themselves during this period, which makes it the perfect opportunity to continue marketing. The less noise there is, the more your brand will be heard.

Albeit 40 years ago, McGraw Hill conducted research during the recession of 1980-1982 and found that companies who sustained their ad spend increased their sales to 256% higher than those who didn’t. It’s still relevant, however, because of how much advertising has changed. With multiple digital channels, getting in front of audiences doesn’t take as much work as it used to. That means faster implementation, wider creativity, and more cost-efficient marketing.

With many businesses kneejerk reaction to stop all spend, the number of competitors in your midst drops. There’s fewer people bidding on the keywords that you’re already using to bolster your marketing campaign performance. Even using the same budget as you regularly would, it’s going a long way further. Considering the reduced competition, every penny is going towards reducing your cost per click.

We’ve already shown that competitor marketing budget reduces during a recession, and they use the time to pivot their brand. The key to taking a portion of your competitors’ market share is to work on brand marketing when they’re not focused on theirs. McDonald’s proved that it can happen. In the 2008 recession, they took advantage of the cheaper TV ad rates and boosted their marketing spend to promote their new, cheaper – unsurprisingly – prices.

Remaining present in these tough times ensures you stay at the forefront of your audience’s mind, as well as reaching new prospects. Remain active and invest in the long-term success of your brand, creating a perception that you are established, reliable and credible.

There’s no denying that consumer behaviour changes as we’ve seen the success of McDonald’s pricing strategy in line with reduced consumer spending. Are they altering their online habits and behaviour, do you need to adapt your approach and presence as a result?

Pivot with your consumers and adapt to ensure they stay loyal. Use technology to keep a watchful eye on your brand with social listening. Keeping budget requires strategic activity – aspects in your audience are ever changing and it can be difficult to fully anticipate behaviour, so monitor the market wisely and adapt accordingly.

In an economic downturn, customer experience is crucial to maintaining customer loyalty and market share. An omnichannel strategy provides customers with the unified experience they are looking for, making it easier for them to find the products in ways that are best suited for them. A positive, consistent customer experience will help foster further engagement and establish trust in your brand.

In conclusion, it’s clear that despite the economic downturn, businesses can still remain competitive and invest in their marketing budget. By pivoting strategically, monitoring consumer behaviour and focusing on customer experience, businesses can capitalise and make the most of a recession. The key is to remain agile and flexible, while continuing to invest in long-term success of the brand.

If you are looking for an impactful promotion that delivers ROI and can protect and yield long-term brand results, we have a wealth of experience. Contact us today to find out how a partnership with Benamic could be the investment that really gives you the competitive edge.