When the economy takes a widespread, significant, and prolonged downturn, this is known as a recession. While a natural part of the ebb and flow of the market, recessions often incite panic and fear, as reduced consumer spending, high unemployment, and fewer opportunities for investment, can lead to poor business performance. As a result, businesses scale back to try to limit exposure to systemic risk by cutting areas of spending that aren’t directly related to core operations, like digital marketing. However, in doing so, this could have serious and negative consequences on your ability to survive and accelerate your growth on the other side. Let’s dive into why it’s important to double down on digital marketing during a recession, and what steps you can take to prepare for it.
How Recessions Change Business & Consumer Spending Behaviors
During recessions, both businesses and consumers alike are faced with increased pressure to cut costs, eliminate excess spend, and make only essential purchases. On the consumer side, this pressure leads to caution around spending money, and becoming mindful of purchases. This can manifest in a change of behaviors, such as:
- A reduction in all types of spending, including postponing purchases entirely or substituting purchases for cheaper alternatives. Consumers who are hit with unemployment or health issues are pummeled the hardest financially and will become anxious about spending – they will “slam on the breaks” across all areas of spending.
- Those who keep their income are more resilient, but may not be confident in maintaining their standard of living. All areas are economized as a result, and as the recession wears on, these consumer types will begin to aggressively cut all areas of spending.
- Well-off consumers will feel secure about riding out the recession, and while they may be a bit more selective in their purchases, they will still buy at or near pre-recession levels. These individuals are either wealthy, comfortably retired, or low-risk investors.
- Finally, the last segment of consumers tend to “live for today” and are unconcerned about riding out the recession. These individuals may extend their timeframe for making purchases, but are unlikely to change consumption behavior unless there are extenuating circumstances like sudden unemployment or health problems.
These changes in spending behavior can have a big impact on businesses, leading to losses in revenue from decreased sales, and an increase in competition as businesses fight for a smaller pool of consumers. As a result, businesses look to reduce costs, which is why hiring freezes happen, digital marketing budgets get slashed disproportionately, and other belt-tightening initiatives are put in place.
The Importance of Ramping Up Digital Marketing In a Recession
However, decades of research indicates that maintaining current digital marketing spend (doubling down) or even ramping up advertising, actually pays off better for businesses1. There are two reasons for this:
- While every other business is pulling back, your business is far more likely to be noticed as there will be fewer ads in the market. The less noise there is, the greater the visibility you will have. The more exposure you have, the easier it will be to connect with your target market(s), track customer behavior, and understand how they’re interacting with you, so you can make data-driven decisions about your marketing strategies. You remain agile, and responsive to market fluctuations.
- While marketing aggressively may seem counterintuitive, your business is far more likely to maintain a steady volume of sales through the recession (even if it’s smaller), effectively allowing you to “weather the storm”, plus it can help you in the following years as you’re far more likely to be remembered. By remaining steady, visible, and flexible during the recession, your customer base is going to feel supported, and will put their trust in you afterward. This boosts sales and growth after the recession subsides.
As your competitors panic and make drastic cuts, they are effectively handing you the opportunity to increase your market share. In remaining calm and ramping up your digital marketing, you stay visible and top-of-mind during the recession, showing consumers that you’re invested in them, are “forward-thinking” and are ready to remain flexible to changing consumer habits. After the recession subsides, you won’t have to start from scratch to remind people about your business, or scramble to meet the increase in demand. This makes you well-positioned to take advantage of the rebound growth, and emerge stronger than before.
5 Steps You Can Take to Prepare for a Recession
The challenge with digital marketing in a recession is not to cut it entirely, but find the areas where you can hold it steady, and areas in which you can increase it. Here are some ways you can prepare yourself to survive the slump:
- Lean Into Customer Loyalty & Appreciation: during a recession, customers become more value-conscious and are more likely to stick with brands they already know, like, and trust. If you have a strong base of loyal customers, this is the time to double down on your customer appreciation and loyalty programs. This will not only maintain customer satisfaction and prevent attrition, but will create affordability for those that are cutting back. This can either help you maintain sales from the hardest hit, or even increase your sales as you become more affordable for all.
- Focus On Organic Channels for Marketing (SEO/Content): one of the best ways to increase visibility and reach during a recession is to invest in SEO and content marketing. These digital marketing techniques offer businesses the opportunity to grow online, naturally, without the need for massive budgets (think paid ads), and they have long-term ROI. As people become more mindful of how they’re spending their money, they will do more online research before making a purchase. You want to make sure your brand comes up as a trusted resource in relevant searches. Investing in SEO will ensure this, and content marketing will help you build a base of potential customers that you can nurture over time.
- Fortify Your Emotional Connections to Bolster Trust: in a recession, people are uncertain, uneasy, and looking for brands that they can trust. Use your digital marketing to build an emotional connection with your consumers so that they see you as a trusted resource, and industry leader. You do this by humanizing your brand, telling stories, and creating content that is helpful and relevant to what your target market is currently experiencing.
- Monitor Your Digital Marketing Metrics Closely: you will need to be extra vigilant in monitoring your digital marketing metrics so that you can quickly adapt your strategies as needed. This means keeping a close eye on website traffic, conversion rates, leads, and sales, to ensure that you can weather the downturn.
- Get Your Sales Team & Digital Marketing Team Talking: with recessions comes anxiety and product/service pipelines that run dryer from less consumer spending. The team that hears about this and sees it in real-time is the sales team, which is why your sales team and digital marketing teams need to be talking to one another. Work together to gain insight into how your consumers are feeling, what they’re saying no to, and use this to develop new ways of speaking to them that will resonate as you survive together.