In uncertain times, marketing budgets typically are one of the first to get slashed and often are slashed the most.
This is a strategic mistake.
Data shows that companies that emphasize marketing during economic downturns tend to come out ahead. For example, during the Great Financial Crisis (GFC) of 2008, brands that maintained or expanded marketing spend generated positive ROI¹ in the short term and realized superior results over the subsequent decade².
Of course, that’s not to say that marketing shouldn’t adapt during times of economic uncertainty. Just that an automatic, across-the-board budget cut is not an effective long-term strategy and a dubious short-term tactic.
Why is this the case?
Well, for one, it is well known that upper-funnel marketing is more effective than lower-funnel marketing over the long term, and only somewhat less effective in the short term. In times of economic uncertainty, customers are even more likely to rely on established brands with which they are most comfortable and loyal (see our related post). Top-of-the-funnel marketing efforts focus on brand and the customer relationship. Maintaining brand visibility provides customers with continuing comfort and signals brand strength. A useful tactic in this regard is to get closer to your customers and prospects by conducting quality market research to find out where they are in terms of their PEBAs (Perceptions, Emotions, Beliefs and Attitudes). You may learn that there are additional prospects to market to than under normal circumstances. Either way, emphasizing the human side of the brand experience is critical in hard times.
Next, media costs often decrease during economic downturns due to supply-demand dynamics, making for more efficient media buys. On top of this, the likelihood is high that your competitors are throttling back on their marketing efforts, giving your efforts extra impact—should you maintain or, better yet, increase your marketing spend. Capitalize on your competitors’ fears and advance when they retreat.
Of course, during difficult times, a brand may also want to increase mid- and bottom-of-the-funnel tactics to convert more business but any increased efforts in performance marketing must not be at the expense of brand marketing.
The Brand Optimization Checklist
Looking for a Brand Optimization Checklist? Every so often, it can be useful to step back and evaluate how well your brand is defined and what, if any...Read more
Another strong tactic during economically troubled times is to emphasize convenience for customers. If you help make customers’ lives easier during hard times, they will be more likely to remember and reward you by staying loyal—both now and in the future.
Any content you generate should be tweaked to fit the situation and be aligned with what your customers and prospects are experiencing. It may also be a good time to update your brand story similarly.
In summary, when the economy takes a turn for the worse, resist the reflexive tendency to cut back your marketing activities. Rather, be smart and agile and consider investing more in those activities that will give you both short- and long-term advantages over your competitors and optimize growth. Remember the words of Peter Drucker:
“Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”
That’s why it’s a strategic mistake to cut marketing spend during difficult economic times.