Fashion giant H&M is doing it. So is industry disruptor Netflix. Telecom leader Comcast is getting into the act, too. Brands across America are slashing costs and trimming budgets in preparation for a potentially long-term recession that might be here sooner rather than later.
This response isn’t completely unjustifiable, either. When times become uncertain, companies understandably want to conserve their cash reserves. Cutting down on expenses and preserving liquidity is a proven, predictable, and powerful risk management strategy. Yet too often, the first thing on the chopping block is most of the marketing budget.
Although cutting the marketing budget during a recession or near-recession might make sense from an administrative standpoint, it’s a detrimental move for the overall success of a business. Despite the uncertainty and upheaval of economic fluctuations, those events can present opportunities to capture market share. It’s the principle of zigging while others are zagging; you open the door to take market share. In a study on the most resilient retailers, McKinsey & Co. noted that none of them let their overall marketing spending dip, even during a recession.
Let’s say you’re a cash-positive business. Even if all your company can do is continue spending as before without increasing a penny, you’ll still see significant advantages when the market recovers. Your SEO will stay strong through the downturn, your branding won’t lose traction, and your leads will keep pouring in. Yes, you’ll be putting money out, but if you’re pragmatic about how you do it, you’ll bring more money in.
On the other hand, if you give in to the knee-jerk inclination to starve your marketing budget, you’ll put yourself in a vulnerable position. Why? At least one of your competitors isn’t going to slash their marketing budget; they might even ramp up marketing strategies to fit the times. Accordingly, when the fog lifts, you’ll struggle to catch up while your competition gains more steam and leaves you in the dust.
A prime example of investing in marketing during a recession occurred during the initial stages of the pandemic. Threadbird, a custom printing company, felt the economic strain like every other business. It furloughed staff and decided to squeeze 75% out of its marketing budget. However, it left its SEO in place. As a result, it saw a 95% uptick in revenue thanks to its belief in funding organic and technical SEO.
Threadbird did make cuts to its digital marketing during the recession. Nevertheless, it learned how to get the biggest bang from its spending. It didn’t simply defund all its programs, campaigns, and initiatives. It put dollars into the ones it felt would produce the strongest ROI. It’s not surprising Threadbird decided that SEO deserved the most financial support. For every dollar spent on SEO, statistics suggest that a company can expect returns in the ballpark of $22+. Those are terrific odds by anyone’s judgment.
How to Determine Where to Put Your Digital Marketing Dollars Next Year
Rough times are ahead, even if we don’t enter a full-fledged K-shaped recessionary period. Inflation is already through the roof, and many companies are establishing no-end-in-sight hiring freezes. Yet you need marketing because it’s the driving force that connects you to target audiences.
Below are some ways to successfully save your allocated marketing funds.
1. Push money toward digital marketing.
In general, digital marketing — as opposed to traditional or offline marketing — is an excellent place to spend when times are tough. Take pay-per-click, for example. PPC is flexible and measurable, making it easy to adjust and monitor. You might want to free up money from higher-cost marketing strategies and move it to PPC.
SEO is another tool that deserves your focus and financial support as part of your digital marketing during a recession. Content marketing does, too. Publishing valuable content helps you grow market share. Don’t slow it down when times get tough. Instead, get more content flowing and capitalize on gaps in keyword-related targets that your competitors have missed.
2. Narrow your audiences.
Every business has its consumer segments. Now is the right moment to evaluate yours. Break each one down into four types of customers: hardest-hit, planners, well-off, and unfazed. Your hardest-hit are most likely to be affected financially by a recession and might stop buying anything but necessary items. The planners will want to maintain their standard of living, so they won’t cut back right away. Same with the well-off, who might never have to make concessions.
Unfazed consumers treat everything as if nothing has happened. They buy what they bought before and at the same rate. When evaluating your segments, consider how you can market mainly to the well-off and unfazed (and maybe the planners). Your job is to stay in front of the most recession-proof audiences.
3. Go for versatility.
As part of your marketing spend restructuring project, fold some lower-cost marketing experiments into the mix. You might want to partner with microinfluencers who have strong bases that align with some of your more profitable target audiences. Or you could try putting out more video content.
Publishing videos on your social media, business website, and YouTube channel can be cheap but effective, particularly when doubled up with PPC campaigns you’re already running. You don’t need anything other than a smartphone, good lighting, good audio, and a solid concept to put a video together. It might be well worth a shot.
A recession can feel scary and overwhelming. However, it’s important not to make marketing a casualty by cutting your marketing budget during recession periods. You’ll be glad you kept such a valuable asset when the rebound occurs and you’re in the lead.
About the Author
Danny Shepherd is the founder and CEO of Titan Growth, a growth-focused digital marketing agency specializing in comprehensive SEO and paid media strategies. Titan Growth curates specialized services that are profitable and sustainable to help businesses meet their digital marketing goals. With over 15 years as the president of Titan Growth, Shepherd has been named one of San Diego’s most admired CEOs by the San Diego Business Journal. Recently, Titan Growth was voted one of the top five businesses to work for in San Diego, a top agency by Search Engine Land, and one of the healthiest companies in San Diego.