It’s official: We’ve moved past “unprecedented times” and the “new normal” and have entered the “Everything-is-Weird Economy”.
Over the past couple of years, it has seemingly been one extreme after another — record-high unemployment followed by record job growth followed by record voluntary job changes. Record-high consumer spending followed by record-high inflation. And even more confounding, record-low consumer sentiment.
I, for one, am tired of setting records. The constant pendulum swings give consumers and businesses little confidence for planning ahead, and the only thing we can probably agree on is that everything really is weird.
Unfortunately, that’s not really an actionable business tactic.
As we sit on the brink of a possible recession, it’s hard to determine the next moves your business should make. All too often, marketing budgets are the first to be scaled back. We surveyed nearly 250 marketers, and while 59% of respondents said they either were not adjusting their budgets or weren’t making significant changes, almost 40% said they were cutting back on marketing spend in anticipation of a recession.
But cutting back on marketing isn’t always what’s best for your business. In fact, it could be catastrophic.
Should You be Cutting Back on Marketing Spend?
Cutting budgets seems like a risk-averse move, but history shows that companies can make large gains in down markets if they continue to invest in marketing. If you have the option to continue marketing, it’s usually a good move in the long run.
During the recession of 1920–21, companies that invested in advertising increased their sales and growth compared to those that didn’t. These companies also saw continued growth for several years following the recession, unlike their competitors that had cut advertising spend.
The 1981 recession showed similar results — businesses that maintained or increased their advertising budgets saw significantly higher sales growth during and after the recession compared to those that eliminated or decreased advertising.
You get it. But we’re not technically in a recession. So…
How Do We Know if a Recession is Going to Happen?
The short answer is we don’t until it happens.
Eight economists make up the National Bureau of Economic Research (NBER), and it’s their job to declare a recession. They define a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” But each economist may have a slightly different method by which they measure a recession because there’s no textbook definition.
This PlanetMoney TikTok gives a humorous explanation of the situation.
All of this means, there’s no clear timetable for when we’ll know if a recession is happening. For instance, in 2008, the committee took nearly a year to declare a recession occurred. Conversely, NBER declared the most recent recession, in June of 2020, just four months after it began.
The standard practice since 1974 has been that two consecutive quarters of negative GDP was considered to be a recession. But these definitions don’t match the two-month-long pandemic recession claimed by the NBER, so the waters are muddy.
So the Answer is …
In the spirit of the Everything-Is-Weird Economy, it’s tricky to predict what’s to come. We’ve got surging inflation with continued job growth and steadily increasing wages. By some accounts, we’re sitting pretty. By others, we should be clutching our pocketbooks.
A Gartner study shows that the average marketing budget has increased this year to 9.5% of total business revenue, up from 2021’s 6.4%. But this number lags behind pre-pandemic spending. We’ve also seen pauses on hiring and mass layoffs across the board, all factors that make predicting what’s next nearly impossible.
But rather than anxiously drinking coffee as your house burns around you like that dog meme, there are things your marketing team can prioritize.
How to Get the Most Bang for Your Buck
Whether your company has decided to reduce spending or is considering increasing your budget, here’s what we recommend you do to get the most out of your marketing budget.
Cut Costly Contracts
Look at external contracts with agencies and evaluate if you still need their services. In some instances, agencies can be cheaper than hiring because of overhead fees, but if you’re not seeing the benefits of their services and they cost a pretty penny, it’s a good time to cut ties.
Cut Inefficient Tech
The same goes for technology. Just because something was designed to make your team more efficient, doesn’t mean it’s fulfilling its promise. Get rid of tech that makes employees’ jobs more difficult, or is no longer being used. Also evaluate subscriptions that you aren’t using to their full extent.
Invest in High-Performing Channels
Focus your energy on channels that are performing well and that continue to nurture your existing audiences. Bottom-of-the-funnel efforts that have immediate return are obviously a safer investment when times are tough. Use tailored and specific targeting in channels where you’ve seen strong ROI in the past.
However, If you are in a position to invest, broad brand awareness may still make sense. As competitors pull out in an uncertain market, you’re likely to grab attention at a lower cost.
Look to Low-Cost/High-Return Options
Email marketing is one of the cheapest ways to reach your prospects and one of the most effective at driving adoption. Put some serious effort into your email strategy and you’ll see big gains fast.
Also think about other avenues to reach your customers on the cheap. Monitor engagement across your social channels to see where your highest converting channels are, and create a game plan to increase posts.
Capitalize on Free Advertising
Your existing partnerships with other brands can be a godsend during difficult times. Work out a system of cross-promotion to reach an audience that may be less familiar with your brand, but likely to listen to your outreach.
“If you have a co-marketing partnership with another company and you can work together, you can essentially double your power,” says Kate Erwin, head of content marketing for Contractbook, a Danish contract automation company.
Additionally, your current employees can be a great — and free — marketing channel. Spin up some competition to get your employees chatting online about your product. For instance, ask your employees to talk about how they’ve used your product on LinkedIn, and the one with the most engagement receives a prize. Each individual will craft a unique story, and your audience will grow exponentially.
For example, Contractbook recently refreshed its brand and asked its employees to share a quick post about the most impactful contract of their lives. From home purchases to vehicles, these stories led to a huge jump in brand awareness.
“Instead of just doing a generic message, we were able to really capture the essence of the rebrand — it was all about celebrating the contract,” Erwin says.
Make Your Content its Own Product
Content can be a product entirely on its own, if you manage it correctly. While it’s always important to have content that talks about your product, creating a content hub that helps your customers and prospects do their jobs better is just as valuable.
Have your team craft articles that are truly helpful to your audience. If you can become an authority that a prospect trusts before they even make a purchase, you can create a lucrative long-term relationship.
Figuring out how to proceed as we teeter on the edge of a recession isn’t easy and it’s hard to know what your best bet will be. Use this time as an opportunity to reshuffle your spend to the needs of your business and desires of your prospects. This will get you in a good place to find and keep customers long after the everything-is-weird dust settles.