Recession 2022: How to Thrive in an Economic Downturn
First of all – calm down. Panic is bad for business. So, before downsizing your marketing budget, pulling your advertising, and/or discounting your prices – take a deep breath. While financial institutions are predicting that current inflation levels are indicative of a recession later this year, or early next year, there is still no proof of a “Recession 2022” just yet. Being wary is good, but being prepared is better. Despite the fact that many businesses will be rushing to decrease their advertising budgets in preparation for this economic downturn, we’re here to tell you that you should consider increasing it instead. Or, at the very least, don’t reduce it. There’s an old adage that says: in times of prosperity, you should advertise; but in times of hardship, you must advertise. As a marketing firm whose clients saw their most prosperous financial years during the coronavirus pandemic, we can attest to this statement, and our clients agree. Below are a few ways to survive and potentially thrive in any financial slump.
Be a friendly and familiar light in dark times
Marketing is the most important form of communication between a business and the consumer. It forms the bond that hopefully turns into a loyal and trusting relationship. When you stop talking to your audience in times of economic uncertainty, you’re essentially abandoning them in their hardship. Much like personal relationships, being there for your audience is better than disappearing. In fact, if you’re present during their struggles, consumers will remember and appreciate you for it, feeling up to 86% better about their commitment to your products and services. A friend in need is a friend indeed, as they say.
Turn reduced competition into increased opportunities
While most look at a recession as a plague upon their business, and understandably so, some have chosen to see it as a rare chance for growth. The fact is, advertisers are far more likely to be seen, noticed, and remembered if they’re still buying media when no one else is. It’s almost common sense, right? If all your competitors drop out of the race because of an upcoming hurdle, you’ll be the only one at the finish line, with customers cheering your name! You just need to make it over the hurdle yourself. Spending ad dollars when sales are low is always risky business, but isn’t all business risky? The question is whether or not the reward is worth it, and in this case, the answer is yes. Take Kraft Salad Dressing, for example. During the recession in the early 1990s, Kraft saw a sales growth of 70% after increasing their marketing budget. Why were they so incredibly successful? Well, their competitors advertised significantly less aggressively than they had prior to the recession. It’s that simple. The fact is, if history is any indication of the future, those who continue to advertise during “Recession 2022” will continue to increase sales and profits, both during and after the downturn.
Adapt your strategy
Let’s look at another example – this one from as far back as the 1920s. Post’s dry cereal was the market leader for the category during The Great Depression before deciding to cut back on its advertising budget. Kellogg’s, on the other hand, doubled down on its spending and invested much of its budget into radio – a new and rapidly popularizing medium at the time. They didn’t keep the same old message either. Kellogg’s did their research and offered something they felt their consumers wanted – Rice Krispies cereal – which is still popular and fondly thought of today. The brand saw an increase in profits of over 30% – replacing Post as the category leader – all because they were willing to change their strategy and budget to suit the situation.
Adjust your budget
So then, is increasing your marketing budget the best way to go? Well, not necessarily. There is no one-size-fits-all strategy to thriving in a recession. Not everyone can afford to maintain their current budget during a downturn, much less to aggressively increase it. If you can’t up your budget, maybe you should consider using it differently to suit your newly recession-minded consumer. Alter your messaging, media channels, and advertising spend to suit the mindset and behaviors of consumers enduring the situation. Address their fears and concerns by talking to your target and listening carefully to their responses. Each type of consumer, from the penny hoarders to the penny wasters, will react differently to your marketing efforts. Do your research and learn which, if not all, will respond best to what you can offer. Then, deliver a specially tailored message aimed directly at that target.
The table below, sourced from the Harvard Business Review, is a basic guideline to help you understand how to mold your communications to each type of consumer during a recession.
The right help makes it easier
Despite over 100 years of evidence that marketers have been successful during an economic downturn, tracking this success has only been achievable through a link to sales and profits. Measuring the results of different kinds of media has been difficult, especially for smaller businesses, and ROI has been unpredictable. Today, thanks to technological tools like programmatic ad buying, direct mail tracking software, digital and social media reporting and more, it has become far easier to test creative, study consumer behavior, and save a ton by directly and precisely targeting your customers. There are platforms that offer entire suites of products to manage every aspect of your Recession 2022 marketing, from media buying to social media to paid search ads. And, of course, there are agencies that provide these services and more to help make it safer and easier to navigate difficult times.
Strategic Marketing is a full-service advertising agency, offering over 30 years of expertise, including how to manage your marketing budget during a crisis. We have learned how to tailor any budget to get the best possible results for our clients. We aren’t kidding when we say some of our very best financial years were during economic downturns – and yours can be too. Contact us today to learn what we can do for you, whether or not there’s a Recession 2022.