Why you should not stop marketing during a recession
Date posted: 18 Sep 2019
Posted by: Smithfield
Post category: Insights
Adam Shoefield, founder of Smithfield Media Agency.
I started Smithfield in 2011 at the tail end of the last recession. Starting a business during a recession can be challenging but I strongly believe it is not only possible to survive during a recession but there is a real opportunity to thrive.
During lean times, many businesses make the mistake of cutting their marketing budget back or even eliminating it. But lean times are exactly the times your business most needs marketing.
All the research gathered over previous recessions, indicates that increasing or maintaining your marketing spend will leave your business in a better place. If you do cut your budgets, the following is likely to happen:
- Brand health will suffer. In research conducted by Milward Brown, it was proved that 60% of advertisers will suffer damage to their key brand metrics if they go dark for just 6 months. Across 85 brands who stopped advertising during the last recession, brand usage dropped by 13% on average and image by 6% (Samuel Scott; Advertising in a Downturn; 2008)
- Business performance is negatively impacted. Data2Decisions demonstrated the effects of 2 brands cutting their budgets to zero and by -50% in one year. What they found was that post the downturn, it took the brand that cut its budget to zero 5 years to recover, and the brand that cuts its budget by 50% 3 years to recover. Recovery was measured by impact on profitability (The Drum; if there is a recession, here’s what marketers should do; 2019).
On the flip side, increasing or maintaining your marketing spend during a recession can positively impact the long-term success of your business:
- There is opportunity to increase your ROI. In previous downturns, we have seen media prices fall much faster than sales. If you take advantage of this you can maintain sales and reduce your advertising cost base – thus resulting in higher ROI.
- Competitors are likely to cut their budgets, so there is an opportunity to gain competitive advantage through share of voice – which leads to a long-term increase in share of sales (Don’t hide in your Brexit bunker; 2018).
In summary, even in a recession, consumers are still going to be spending. Consumers are restless and looking to make changes in their buying decisions – sometimes looking for cheaper options and economising. You need to help them find your products and services and choose them, rather than others. The only way to do that is by getting your name and brand out there. So, don’t stop advertising, if possible, increase it. Think about changing the ad message and using short-term price incentives to match the economic climate with consumers who are seeking a good deal. Interest-free loans, coupons or special promotions will help boost sales and market share.
These are just some of the reasons why maintaining or increasing your marketing budget in a recession is key. I hope I have given you food for thought – we might not be in a recession yet, but all indicators are showing this could happen soon.
We are experts at guiding clients through challenging times – If you would like to speak to us please contact my Marketing Director Patrick Woods on 020 7257 2600 or email email@example.com.< Back to News/Blog