Whether the economic fundamentals are falling apart, the Fed is trying to fix a supply chain through demand, or corporate America just feels like the vibes are off, the results are the same – your marketing budget is likely getting cut and performance is going under the microscope.
While every business and marketing program is unique and needs a bespoke approach, there are key program foundations that you should assess when marketing in a recession. Below we will review these considerations and broad approaches you could implement to take advantage of this (hopefully short) tumultuous period, and make the most of your advertising during a recession.
First things first, let’s remember…
Marketing isn’t optional
Advertising was never a charitable write-off or a corporate hobby. Regardless of industry, marketing has an outsized impact on a business, great new products have failed without a supporting awareness campaign and nascent disruptive companies have withered on the vine without inbound leads to sustain them.
And while your finance team might forget the value of advertising, your competitors won’t. Those that win the mindshare of an increasingly frugal customer base will likely come out of this with a market share to match.
Advertising is an investment, and while it may be among the first budgets to get cut when belts get tightened, it will also be one of the most impactful changes to the bottom line. Still even if your budgets remain whole, the program will need to pivot to address the current climate. So let’s look at what we should consider as marketers and what initial steps we can take to ensure our programs go beyond weathering the storm and actually capitalize on this turbulence.
Know Your Business
This may sound obvious but take a step back and reassess who you are and what you sell. Every company will need to take a different approach to navigate this climate and knowing your fundamentals are crucial to figuring out how to go about marketing in a recession.
First, how necessary is your product?
Essential and Immediate – People cannot go without your product or put off its purchase. In April 2020, we all became starkly aware of how immediate and essential toilet paper was.
Essential but Deferrable – People need your product but can delay its purchase. Cars right now are a great example, with auto repairs being much more palatable than an auto purchase.
Nonessential but provides value – People can reasonably go without your product but it still provides value, even if intangible. From ice cream to vacations, these ‘nice to haves’ are immediate victims of spending freezes. While they make a qualitative difference in people’s lives, they take a back seat to rent and groceries.
Nonessential and provides little value – People can go without your product and are likely not impacted by its absence. Bottled water often falls under this category, being a luxury purchase when clean tap water is freely available.
Remember though, necessity can vary greatly from community to community. Our bottled water example, while frivolous in an area where the municipal water is sourced from a natural mountain spring, may be very nice-to-have where the tap water tastes brackish, and literally life or death where the water has become non-potable.
Next as we continue to look inward, we should ask ourselves how “sticky” our product is, or rather what is the barrier for a customer to switch brands. For shoes, a switch is as simple as lacing up a new pair. For a data service, customers may need to do a time-consuming migration and the resistance can be high depending on the process. This is obviously a scale and not a binary question, but it should help inform you as to how much effort should be going into retention versus acquisition.
Know Your Customers
We know our business, but now we need to know our customer base. All consumers will react differently to a shifting marketplace, but understanding our customers will help us message appropriately, allocate marketing dollars more efficiently and optimize effectively.
Full-stop – This segment has frozen if not slashed their budgets. They will be delaying all but what is mission-critical. From basic necessities for consumers to operations for businesses, if you don’t fit into those categories you will likely have a tough time finding success with this segment.
Slow ‘n’ Steady – It’s stormy out there and they are getting a lay of the land before opening up the cheque book. Their buying cycle may be much longer than it was before and research has become paramount.
Unphased – They are aware of the climate and may be more frugal with their purchases, but it is still business as usual. Upselling won’t be as effective as it may have once been, but they are protected or evening benefiting from the current economic climate.
Full-go – This segment be affluent consumers or businesses in boom industries. This segment is aware of the market and trying to capitalize on it. They may pay lip service and wish to avoid appearing unconcerned about the economic situation, but their purchasing habits are largely unchanged, if not increased.
These broader segments may vary from product to product or even see more nuance within more granular audience targets, but should help guide messaging, as well as tactics and budgetary allocations.
Know Your Recession
Okay, this is obviously much easier said than done. No two recessions are the same; there are a host of factors to consider. During the sharpest dip at the peak of the pandemic we saw the market crater as airlines flew empty planes, restaurants shuddered their doors, and previously unbookable hotels went vacant. What was a clear economic contraction, was also a period of unprecedented sales and profits for online retailers, as unaffected demographics shifted their spending habits.
For the current situation, we can argue about the causes of our current inflation issues but supply is not in line with demand. And while the marketing team can’t fix a global economic crisis, it does help us to know that underlying demand is still there and shape our approaches to suit.
Again, these are not one size fits all and the economic situation for a client dealing with high interest rates will be starkly different than one working in international development. But knowing your business, your client, and your market will be paramount as you realign your digital marketing in a recession.
Okay this is all great information, but what exactly do we do with it? Here are some tangible tips for marketing in a recession.
Align Your Messaging
This should be front and center, and is the easiest thing you can do (assuming you still have a design team). What may have resonated before is not going to work now, and your ad copy and assets should be updated to address this. As you start to refresh your advertising take a moment to reflect on the customers’ attributes you just identified and start to bake them into your messaging.
Value prop, value prop, value prop: This goes without saying, but you should be considering how your product illustrates value and how your messaging will reflect that. Every company has the best product with the hardest working team, so if you’re not identifying what your core differentiators are, you may as well just save the media budget.
Price – You can, of course, be less expensive than your peers. Sticker shock is real and having the more compelling price point is always the easier sales conversation.
Time – Time is money, especially when your target buyer has seen a hiring freeze or even cuts. Enabling them to do more with less can make a cost difference nonexistent.
Feature – If your product can create its own value, you need to showcase that. Being a profit multiplier at a time when companies are scrambling for revenue can make you invaluable.
Trust – The most intangible value prop on the surface, is really another name for reliability. People are often reluctant to change, so for retention, reminding consumers that you have 99.9% uptime or 24/7 support to keep their operations uninterrupted may keep them from slipping to a competitor, especially when price differences are negligible.
Focus On The Measurable
Reality is your budget may not be whole, and cuts will have to come from somewhere. It’s time to assess everything from broad channel strategy to individual ad copy performance. While awareness drives leads, it becomes challenging for a medium to small-sized marketing team to prove these out or keep faith in the fundamentals and the value of paying for clicks (CPC) vs. paying for impressions (CPM/CPV) becomes really clear.
While this does mean some awareness platforms may be impacted, it does not mean the tactic itself needs to be abandoned entirely. Moving to more trackable awareness tactics can help bridge the gap. So look at how programmatic can supplement print ads, Video-On-Demand can replace terrestrial TV, streaming can replace radio, etc… You may not be reaching as broad an audience, but you will have finer controls and greater insights into how they behave.
It’s time to get serious about conversions. If you’re not an ecomm business, it’s time to define what a lead is worth to you. I have seen Fortune 500 titans and fledgling startups all give me a shrug and a sheepish grin when I ask how much a lead is worth. This doesn’t need to be a perfect number, but without anything, you’re just operating on feelings alone. If you can’t or won’t quantify what a lead is, then embrace your front-end traffic metrics. These don’t need to be vanilla site visits either, go get fancy, start looking at time on site, know which pages are more valuable, make the website a resource that solidifies the brand.
Finally, make sure your audiences are actionable and observable. If your audiences are mishmash groups in poorly defined campaigns, you won’t be able to see trends, let alone react to them. Thoughtful segmentation will be invaluable long after the economic climate has passed. Being able to accurately serve the tailored messaging you just created will pay literal dividends. Make sure your personas/audience segments are clear cut and participating in the creative conversation.
Buy The Dip
A past client once asked how their smaller competitor was able to afford a billboard in Times Square and wished to do the same. And the answer was simple: either build a time machine or manufacture another global pandemic that will cause a glut of inventory and crash media prices.
With any economic dip, advertisers pulling back means media costs will likely be flat or even possibly down. From Google Ads to broadcast TV, industry wide marketing budget cuts can have real world impacts on cost. For some mediums this may not be as apparent or accessible, but for many digital/PPC platforms this will become evident with diligent monitoring. For example, Google Ads saw 33% cheaper CPCs in 2020 than in 2019. Again, having concise focused campaigns will make these trends easier to see and act upon.
For marketers that may find themselves in a rare situation of managing growth, consider being aggressive. Operating in newly opened whitespace can allow you to own categories and reach incremental customers. For new companies without strong brand awareness, this may be a chance for you to be active in a space that may traditionally be uncompetitive.
All Hands On Deck
The increased attention may be frustrating, as reporting tasks balloon and performance comes under a microscope, but it can also be a rare moment of opportunity for a marketing department.
Buy-in – With leadership injecting themselves into the day-to-day, it can be a great time for them to renew their commitment to the program. When executives feel they have a stake in a project, they may be much more likely to defend it and see it to fruition. Now can be a rare moment to get organizational support that may not have been previously available.
Rip The Bandage – From roads to codes, most of the word is duct-taped together and built on top of legacy system after legacy system. With the focus on revamping your marketing program, this may be a short-lived opportunity to cut pet projects and clean out the cobwebs. Once unthinkable things like switching KPIs, cutting a legacy partner, creating holistic programs and so on, may finally be attainable. Additionally, if you have a cache of trust, a performance dip from restructuring a program now may be more palatable to leadership.
The Future is Now – For us old school advertisers it is hard to let go, but AI is increasingly making our job easier and helping lessen the burden of reduced team sizes. In both campaign activation and content creation AI is creating efficiencies that can enable you to take a deeper dive into the data. Don’t be afraid to use natural language bots to help create draft copy, click fraud detection to block substandard traffic, and of course automated bidding strategies to maximize conversions.
Remember there is no magic formula for effective marketing in a recession or advertising during a recession. Like in any economic climate, your results will be only as good as the product you sell and how well you can tell its story. With a solid understanding of your unique space, you should hopefully be able to weather this and come out stronger on the other side.
Patrick Brady is the Director of Paid Media at Firebrand. With over 15 years of experience he helps lead digital clients through the ever changing world of online advertising. Prior to Firebrand, he led PPC efforts for multiple Fortune 500 companies across the B2B and B2C space.