Marketing budgets tend to be one of the first cost cutting tactics businesses take during a recession. While this isn’t recommended, it’s an unfortunate reality.
There are many reasons you shouldn’t cut your marketing budget during tough economic times. If marketing costs need to be reduced, there are ways to save while investing in tactics and strategies to drive new sales and leads.
I’m going to tell you the best bang for your buck marketing channels to invest in during tough times. I will also tell you where you should be looking to save money on marketing.
Table of Contents
- 1 Why you shouldn’t cut marketing budget during a recession
- 2 Being opportunistic with marketing during a recession
- 3 Recommended Marketing Strategy During a Recession
- 4 What to cut from a marketing budget
- 5 In Closing
Why you shouldn’t cut marketing budget during a recession
Cutting advertising and marketing costs seems like a simple solution during a recession or tough economic times. If you take this route, it weakens your sales pipeline. There will be less leads and sales for your business.
Once the recession ends, brands want to relaunch and invest back into marketing. The issue is it takes time to generate new leads, nurture those leads and close new business.
Marketing strategies and tactics take time to develop. When you scale back marketing, you are putting new business development to the backburner, which is never a great option.
I compare halting marketing efforts to not staying in shape. If you don’t workout, stay active or eat healthy, you become unfit. Once you decide to get back in shape, it’s much harder than if you had stayed consistent with your workout and diet. The same analogy holds true for marketing
Being opportunistic with marketing during a recession
During tough economic conditions, you can be opportunistic. With less businesses advertising, there’s a cheaper cost per click on paid ads, which can lead to a lower cost per acquisition. There are also many businesses that do well during a recession, like discount stores. If you don’t spend money during a recession, you can miss out on new business opportunities.
Related Article: How much should you spend on marketing and advertising?
Below are examples of how our brands capitalized during tough economic times:
During the 2020 pandemic, our agency landed one of our largest web design clients, a hand sanitizing company. Everyone and their mother wanted hand sanitizer during the early stages of the pandemic. This company knew their website wasn’t fit to handle the increase in website orders they were expecting. If we hadn’t invested in paid advertising, this client would have never come through for us.
In addition to our agency, we have an in-house 7-figure eCommerce brand, DermWarehouse [learn more]. I initially wanted to cut our advertising budget at the beginning of the pandemic. I didn’t think people would be investing in skincare products when they weren’t leaving their house. My sister, Stefanie Parks, who runs the day-day of DermWarehouse, advised against this. There ended up being a skincare and self-care boom, leading to our highest return on ad spend ever. If we cut advertising, we would not have been able to double our customer base in the span of 12-months. Here you go Stef… You were right!
Related Article: What’s a good return on ad spend for eCommerce?
Recommended Marketing Strategy During a Recession
I understand that spending money on advertising and marketing during a recession can be challenging and may not feel like it makes sense in the moment. I’m not telling you to keep investing the same amount of money into marketing as when business was booming. I want to point out the best tactics for lead generation at the lowest, most economical price points.
Related Article: How much money should I spend on advertising and marketing per month
When you send email messages to customers and prospects, it yields one of the best returns on investments. According to Constant Contact, you generate $36 for every $1 spent on email. With MailChimp, if you have under 500 contacts and do less than 2,500 email sends per month, you can send emails for free.
Related Article: eCommerce Email Marketing Statistics
- If business is slow, spend more time writing email newsletters to share your knowledge and expertise.
- Clean up and organize your contact list. We recommend starting off with a list of contacts for prospects and customers. This will allow you to strategically send messages to your customer base and potential customers.
- By sending valuable content in the form of email, you will build brand loyalty, trust and awareness.
Search Engine Optimization
The beauty of SEO is the placement is earned, meaning you don’t have to pay for each click when you rank well on search engines. Profitworks estimates that the average ROI of its SEO services is $2.75 for every dollar spent, or a 275% ROI.
SEO success doesn’t happen overnight. You must be patient and put in the work. Most people fail at SEO because they don’t have the right strategy and fail to execute on what’s needed.
If business is slow, start investing more time into improving SEO. Below are some tactics that can be handled by your team:
- Create a blog strategy
- Enhance existing pages on your site
- Remove low quality content
- Improve internal linking
- Optimize Google Business Profile
Improving your website and SEO will help your business generate more leads organically, which is a profitable endeavor for your business.
Related Blog: How long does it take to rank on Google
Interested in getting an SEO audit done for your business? Contact TMC.
Social Media Marketing
It doesn’t cost a penny to make an organic social media post on Facebook, LinkedIn, TikTok or Instagram.
When business is slow due to a bad economy, share what’s happening at your company.
- Showcase the personality of your team members, which boosts morale.
- Share success stories from your customers.
- Cross promote content from your blog and email newsletters.
- Be consistent with your social media posting.
You’ll generate more interaction, engagement and connections by following the steps above.
93% of customers read reviews before purchasing a product [source]. Businesses displaying ratings and reviews experience average revenue uplifts of around 18% [source].
The beauty of getting online reviews is that it can be done for free. You can reach out to current and past customers and ask them to leave a review.
We implemented this tactic for DermWarehouse. We were getting a lot of product reviews but there were little reviews on Google. We started reaching out to customers who left a positive review for us via TrustPilot. Within 6-months, we obtained over 100 positive reviews.
Being proactive with your reviews is a marketing tactic that will yield a long-term ROI.
There are paid services for review management to help with sending text messages and automating emails. If you have a lot of customers, you may want to consider this option.
What to cut from a marketing budget
There are a lot of articles you’ll come across that say you shouldn’t scale back marketing during a recession.
I agree that marketing shouldn’t be cut completely, but there are areas where you can scale back, especially if you are losing business and having trouble paying the bills.
A recession is a good time to trim fat and improve operations and campaign performance.
Below are some ways I recommend auditing your marketing and advertising performance.
Below are ways I like to audit advertising performance.
- How much are you spending per channel?
- How many conversions are you generating per channel and what’s your cost per acquisition?
- Are you seeing a lower conversion rate during tough economic times compared to the previous year?
- Is the ad creative fresh and relevant to reflect the tough economic times?
I don’t recommend cutting ad spend completely. If there are opportunities to scale back on poor performing channels, this is a good practice. You may also consider putting more money towards top performing channels. It’s never a bad time to improve the structure and set-up of each advertising account as well. Once you audit your performance, you will likely see that there is a good amount of fat to be trimmed and this will only help you in the long run.
Marketing Agency & Employee Performance
During a recession, having a component marketer is more important than any other time. They need to navigate your business through the choppy waters.
If you have an agency or employee, their performance should be audited to ensure they are delivering results to justify their fee/salary.
It can be challenging to deliver strong results during tough times. There should still be an explanation for what’s working, what’s not working and why. All of the tasks they’re working on should be evaluated to ensure they align with business objectives and make sense for the situation.
Low Performing Channels
If you are paying someone to perform SEO or social media and are questioning the performance results, this service should be audited. What I recommended investing in during a recession was intended to be handled in-house to save on expenses. If the results aren’t justified, audit this just like you would anything else in your business.
- There are ample marketing opportunities during a recession.
- Don’t completely cut your marketing and advertising budget, instead, scale down and reallocate depending on performance.
- Focus on the most important and profitable services during a recession.
- Audit the performance of your team and vendors as this is a healthy tactic.
- Investing in marketing and advertising will keep your sales pipeline in-tact so there are leads and new business coming through the door.