Marketing during a recession: There’s more opportunity than you think
So there’s an impending recession. Or it’s already begun. Or we’re in the thick of it. Whatever the case, there’s a lot of unknown – especially for marketers. Marketing budgets are often the first to be scrutinized and slashed, putting serious pressure on CMOs to prove the value of their marketing strategy and activities.
Marketing during a recession is a risky business, no doubt about it. The stakes are high, jobs are on the line, and growth seems near impossible. But history tells us that whoever has the biggest appetite for risk will win.
How B2B buyers respond to a recession
In stable economic times, marketing success comes naturally. B2B buying committees have the financial means and freedom to invest in new software. Purchase objections are lower, and customers are less concerned about getting the best possible deal. In fact, they may actually value their time more than money and make purchase decisions faster.
A recession turns the table. Businesses suddenly hold their money close to their chests. They’re more prone to skepticism and price comparison because every dollar is precious. The same is true for existing customers. If they aren’t 100% convinced that your software is essential to their operations, they may cut you from their tech stack.
How B2B brands respond to a recession
In the face of a recession, we often see businesses do one of four things:
- Burn the furniture – “Cut the marketing budget. Kill the campaigns. We must save money!”
- Spray and pray – “Let’s market to everybody, all at once. Something’s got to work!”
- Sit still and don’t move – “Let’s wait it out and see what everybody else is doing. Then we’ll decide what’s next.”
- Take the risk – “This is a window of opportunity. It’s risky, but we could pull ahead if we get it right.”
These varied responses result in high highs and low lows. Research shows that there are 47% more “rising stars” and 89% more “sinking ships” during economic downturns than during stable periods.
What past recessions teach us
As scary as recessions may be, they aren’t unexpected. “The New Recession Playbook”, by Bain & Company, said it best: “Recessions are a certainty – only the timing and depth are hard to predict”. Let’s look at how brands have responded to past recessions.
1920s (Post-WWI Depression)
200 companies were tracked through the 1923 recession. The companies that continued to advertise were 20% ahead of where they were before the recession. Companies that cut marketing activities were 7% behind where they were in 1920.
1980-1985 (The Banking Crisis)
600 companies were tracked across 16 different industries. Post-recession results showed that brands that continued to advertise during the recession experienced 256% higher sales than their competitors. Those who stopped advertising? Zippo. And they only saw an 18% rise in sales even after the market rebounded.
2008-2009 (Global Financial Crisis)
Studies show that the companies that continued to market through the recession gained 3.5 times more brand visibility than those that cut budgets and waited it out. And it wasn’t just established brands that met with success. Groupon, WhatsApp, Venmo, and Uber were all founded during the 2008-2009 recession. Imagine if those brands sat back and thought: “Nah, it’s too risky”. Instead, they zoomed out and saw an opportunity to help people in a hurting economy. Not only did those four brands meet with global success, but they also kickstarted new categories of technology that we now rely on every day.
2019 – 2021 (COVID-19 Pandemic)
Entire industries were turned on their head in a matter of days, and marketers scrambled to adapt to the digital-first climate. According to Salesforce’s Seventh State of Marketing report, 90% of marketers changed their digital engagement strategy and 89% changed their marketing channel mix. Social media, digital ads, and video played critical roles in customer engagement during the pandemic, and continue to be leading channels today.
Why you should keep marketing during a recession
Grow brand awareness
Brand awareness isn’t sales-dependent. It’s marketing dependent. So even if customers don’t buy from you during the recession, you can work hard to make sure your brand is the first to come to mind when the market stabilizes and spending increases. Not convinced that a few months without advertising will make a difference? Research shows that after just six months without advertising, average consumer brand awareness decreases by a whopping 24%.
Keep your name up in lights. When the market rights itself, you’ll be closing deals while competitors are scrambling to recover after pulling the pin on advertising.
Reassure your customers
It doesn’t matter what industry you’re in, your customers can smell fear. They don’t want to buy from weak, struggling brands. They will gravitate toward strong and resilient brands.
When you keep marketing during a recession, you reassure customers that you’re still in the thick of it with them, driving value and helping their business make it out the other side.
Seize the opportunity to pivot
If the market is shifting, why not shift with it? Recessions provide the perfect opportunity to change up your pricing model, market new features, or offer a lower-cost solution to more rapidly capture market share. Remember, customers are more price-conscious during a recession, so they’re already on the lookout for a deal. Play this to your advantage and consider creating an offering that meets customers where they’re at.
Tiller is actually a pivot success story. We made a big move during COVID and niched down – from serving all B2B to dedicating ourselves to helping tech and software companies. The sudden shift to remote work accelerated digital transformation and created a time-sensitive opportunity for tech companies to prove their value. We positioned ourselves as the agency to help them do it, and it was the best move we’ve ever made.
A word of caution to pivoters – be careful not to pivot too much or too quickly. Pivots that pull you away from your core services or company values can confuse customers and erode brand trust.
Keep the momentum going
You’ve worked hard to build brand awareness, brand equity, SEO scores, and social media followings. Your present success is likely the result of years of perseverance. If you stop investing, you’ll lose more quickly than you gained. And when the dust has settled and the market has stabilized, you’ll have to reinvest even more to make up the ground that was lost.
Maximize results from your best channels
The average CMO allocates over 75% of their total marketing budget to digital marketing – search ads, display ads, web, social media, and more. Of course, the whole reason you invest in a mixture of marketing is to discover what works best for your brand. Recessions put that knowledge to the test.
If you’ve been keeping up with web analytics, lead attribution, and click-through rates (CTR), you are well-equipped to advocate for budget allocation to specific channels. But if you aren’t directed by data, you’ll be flying blind and hard-pressed to defend your strategy.
If you’re still wading through Google Analytics reports and drowning in data, consider reaching out to an agency. They can help you set up the right tracking, testing, and reporting you need to understand which channels are driving you forward and which are dead weight. It’s a worthy investment. As a recent MarketingBrew article put it: “The ability to be financially conversant, connecting marketing performance to the broader business, can separate truly high-performing CMOs from everyone else”.
Get to know your customers
Customer needs and expectations change during a recession. Your painstakingly-crafted personas can become outdated in a matter of days. Turn this into a golden opportunity to get back to basics with your customers. Ask how their business is handling the downturn and how your business can help. Document as you learn, and turn those learnings into action. Hyper-relevant content marketing can build brand trust and engagement with new and existing customers.
What are other CMOs up to?
You aren’t in this alone. CMOs everywhere are pulling up their socks and digging into the data. They’re making strategic moves to set their companies up for success in the recession. A few data points from The Wall Street Journal’s CMO Survey:
- On average, 13.8% of company budgets are allocated to marketing (a 14-year high)
- CMOs report 10.4% growth in overall marketing spending over the last year (double the growth reported from 2020 to 2021)
- 40% of CMOs are strengthening their value propositions
- 26.8% are investing in brand building
Choose short-term pain for long-term gain
Recessions put CMOs and businesses to the test. Are you willing to lean into the data, find smart ways to reallocate budget, and fight to come out ahead of your competition? It will take guts. You may have to dig in your heels and advocate to keep marketing alive. But when you do, you put yourself, your team, and your company in the best possible position for growth.