Importance of Investing In Marketing During Economic Downturn
When inflation rises, and when economic signals are bad, businesses typically cut costs. This is a natural and wholly understandable progression — if the future is uncertain, organisations want to reduce business risk.
But is this the right course of action? Rather than scaling back on business activities, companies may be better served by becoming more savvy, deploying marketing strategies that help them move through an economic downturn and come out the other side stronger and better than ever.
It may not even just be about ‘weathering the storm’. With the right marketing strategy and a considered approach to your marketing budget, you can capitalise during these times of turbulence and uncertainty.
In this guide, we’ll be taking a look at: marketing efforts, internet advertising, and other forms of promotional activity can generate real success for businesses, even during a downturn.
When businesses encounter a bear market, strategic marketing investments can help them to navigate this slump. This requires a considered attitude towards marketing spending and research.
A few things to keep in mind as you develop your marketing tactics:
You need to be measuring the right things
Choosing valuable, outcome-focused metrics will help you gain an understanding of how your marketing resources are performing.
You do need to devote some of your budget to marketing
Reducing marketing spend may cut your short-term costs, but it could harm consumer confidence in the future.
You will need to invest in marketing if you hope to survive the downturn
Your business will need to be firing on all cylinders if it is to weather the economic downturn — this is not possible without genuine investment in marketing. Define your marketing budget early, before the situation grows more difficult.
Recessions have happened before, of course, and businesses with the right approach have come out the other side stronger.
They took action early on in the economic crisis.
They had a long-term vision.
They focused on longer-term growth rather than short-term cost savings.
Perhaps previous brand-building investments have not quite worked out for your business, and you are unsure of how to proceed during a downturn. Take a look at these seven important tips as you target marketing success.
1. Take advantage of reduced competition
It’s likely that your competitors will be monitoring their marketing expenses very carefully — even mass-market consumer brands need to take the recession seriously. They may decide to reduce advertising spending, which in turn will reduce their prominence to consumers.
This is a big opportunity for you and your business. If competitors are scaling back their advertising budget, you can fill the gap they leave behind. By stepping up your marketing efforts in a careful and considered fashion, you can position yourself as the go-to brand for your customers.
You may even be able to win customers who have previously been loyal to your competitor’s brands. With the right targeted marketing campaigns, you could find yourself growing your customer base while other brands panic over bad economic news.
2. Get to know your customers
You really need to know your customers. You need to know what they want from you, what they expect you to deliver, and what they value most about your organisation. Remember that your customers are not a homogenous mass — you will have many different types of customers, each with their own consumer attitudes and habits.
Building consumer segments is vital here. Marketers typically segment their customers according to purchasing motivation and demographic. For example, perhaps some of your customers are relatively affluent retirees who put quality and prestige above all else. Meanwhile, another section of your audience may be young professional parents with tight schedules — convenience is key for these customers.
The way you market to these consumer segments will be different. Use segmentation to plan your marketing strategy, and assign your marketing resources and budget accordingly. Also, examine core customers’ changing habits during periods of financial uncertainty so you can shift your approach accordingly.
3. Get to know your competitors too
Many businesses find themselves revising marketing strategies during a recession, which means the marketing landscape may change dramatically. Don’t expect all of your competitors to run and hide at the first sign of bad news — many will rethink their marketing strategy and come back in a positive way, and you can learn from this.
New types of marketing — digital media, specifically — have enabled businesses to reach consumers on a vast scale, without eating up too much of their budget. This form of digital marketing — including social media and SEO strategies — is much cheaper than advertising on radio and local television, or via national broadcast television networks, and can be just as effective.
Do some research into your competitors and discover who is achieving the most marketing successes. Analyse a variety of different businesses — from large consumer product companies to small-scale boutique producers — and learn more about what they are doing to increase market share and connect with their audiences. It’s not about copying these competitors — think of it more as ‘taking inspiration’.
4. Choose the right metrics for your marketing strategy
While we have discussed the importance of maintaining your marketing budget throughout the downturn, it’s not enough simply to throw money at the situation. Substantially, increased marketing investments will only bear fruit if you are able to measure and analyse the result you receive.
So, what do you want to achieve from your marketing? This could be any of the following:
Increased overall conversions
More first-time customers
Increased customer lifecycle value
More impressions on social media or search engines
Greater numbers of subscription signups
Reduced cost per acquisition
Greater average purchase value
You will also need to set time parameters for your analysis. Examine how these key values change over time, and set yourself targets and milestones you want your business to hit.
5. Don’t devalue your products and services
In a downturn, it might feel right to slash your prices. After all, if consumer spending goes down, this may have an impact on your customer segments and their motivation to pay for your products and services. But tread carefully.
Excessive promotions lead consumers to re-evaluate your brand. If you slash your prices, consumers are likely to shift their attitude and view you as a budget company. Always provide your goods and services at a fair price, emphasising the idea of ‘great value’ over that of ‘cheapness’. Pay attention to key retail price points and never undersell your products.
If your customers’ buying habits shift, and they get used to accessing your products at low prices, this can be harmful in the long run. You may find it difficult to encourage customers to buy products at the full price once the downturn is over.
6. Focus on expertise, authoritativeness, and trustworthiness
It’s not unusual for customers to become a little concerned during a downturn. Anxious higher-income consumers may defer major purchases while they wait out the worst of the storm. Right across your audience landscape, consumers set stricter priorities when they engage with you and your business. All of this makes marketing more difficult.
With this in mind, consider Google’s E.A.T. guidelines for content producers — advising businesses to publish content that underlines their Expertise, their Authority, and their Trustworthiness. Google did not choose these guidelines randomly — they choose them because this is what consumers want to see from brands.
Educate consumers on the genuine value and benefits of your products. Deploy brand awareness ads that position you as an authority in your field. Demonstrate how trustworthy you are. For example, if you work in the consumer electronics market, deliver technical information in an easily digestible manner so that consumers know you are an expert they can trust. All of this will be more effective than simply offering temporary price promotions.
7. Consider consumer emotions
Give consideration to your consumers’ emotional reactions. As their buying habits shift during a downturn – perhaps due to changes in health or income circumstances — emotions play an important role.
Show your customers that you empathise with their position. Demonstrate that you not only understand the difficulties they are facing but that your products and services represent the answer. Consumer goods companies and service providers can gain significant advantages by adopting this problem-solution model within their marketing strategy.
While it’s a good idea to invest in your marketing even during a downturn, this does not make budgeting concerns magically go away. Your business still needs to manage the expense of marketing in the right way, which means focusing on strategies that deliver results.
It also means being flexible with your budget. With an advertising budget devoted to low-cost products, you could be missing out on higher-value transactions from customers making major purchases. This is why cash-strapped marketing departments need to be able to manage their budget without compromising on results.
Let’s take a look at how you can get more out of your strategy across three key areas — SEO, content, and social media.
#1. SEO strategy
During a downturn, customers become a little more careful during the research phase of the buying journey. This doesn’t mean they will necessarily forgo premium brands in favour of something cheaper, but it does mean they are more likely to use Google as they search for what they need.
This puts SEO front and centre in your downturn marketing strategy. Focus on the following points.
Keywords are still of high importance in 2022 and beyond. In a practical sense, these keywords simply help customers to find your products and services when they search online. However, it’s not simply a case of putting keywords into your content and hoping for the best.
You need to research these keywords carefully, finding the best options for your business in terms of relevance and competition. You also need to include these keywords in an organic way to avoid falling foul of Google’s penalties.
In the modern digital environment, the consumers’ heightened sense of convenience is something you need to be aware of. If your website or application is too slow to load, customers are going to head elsewhere. This will certainly affect your financial performance, but it will affect your SEO performance as well if too many of your customers ‘bounce’ away from your page.
Consider Google’s Core Vitals — three important elements that have a major impact on SEO. These Core Vitals are:
Largest Contentful Paint (LCP) — the time taken to load the main part of the page’s content
First Input Delay (FID) — the time between the user’s first input and a response from the page
Cumulative Layout Shift (CLS) — measuring the stability of the page’s layout
Your technical SEO strategy should focus on optimising these values, delivering a better experience to the customer.
Make sure your website has the links that Google needs to properly index it. This means ensuring there are no orphan pages within your website, and all elements of your site are connected in an intuitive and logical fashion. Encourage links from other, high-value websites. Never pay for links, or incentivise them in any way — instead, create great content that publishers will link to organically and pursue guest posting opportunities on other websites.
#2. Content strategy
One interesting development during a time of downturn or even recession relates to the buying cycle. Typically, the buying cycle grows longer, as customers spend more time learning about the products and services they want to engage with.
Premium brand market leaders take advantage of this by launching content designed to help customers navigate the decision-making process. This is something you can do too, boosting your brand and customer satisfaction at the same time.
You are likely to encounter pained but patient consumers during a downturn. These consumers are in no rush to part with their money, but they do have genuine concerns and issues that need to be addressed.
This is where market research makes all the difference. You are not dealing with soulless and mechanical consumers, so you should use your content to show that you are engaged with the needs of these customers. Find out problems your customers are facing, and craft content that addresses these issues. You can use direct marketing campaigns too, but an inbound content strategy is going to make your marketing budget stretch further.
#3. Social media strategy
Social media is a valuable tool for a number of reasons. Let’s take a look at these in more detail:
A valuable communication channel
Brands need to be able to reach their customers and communicate meaningfully with them. This is sometimes difficult to achieve using traditional means, but social media makes it much easier.
You can deliver your key messaging via social media, reflecting your brand identity. This helps you to keep marketing communication costs down without compromising your brand reach.
A useful source of data
You need a way to carefully monitor consumers’ perceptions of your brand. In other words, you need to know what your customers think of your business and how they are responding to it.
Analysing social media can help you achieve this. You can track a range of metrics — such as likes, shares and positive engagements — to examine how customers view your products, services and core brand proposition.
You may also want to view your brand name in the context of different topics and hashtags. This gives you some idea of what your customer base is talking about in relation to your products and services, helping you understand the general mood.
A direct marketing platform
Social media platforms are crucial for digital marketing. You can market your products directly on these platforms with online advertising — perhaps on a pay-per-click basis. You can also generate organic interest in your products and services by building your social media profiles.
The more reach you have on social media, the more effective this strategy is likely to be. Don’t neglect these social media channels when you set your marketing budget.
Should you hire a content agency? Don’t let a downturn derail your marketing
While a downturn is worrying, these financial events can affect marketing disproportionately — delivering marketing opportunities while other areas of spending struggle.
This is why it is important to continue investing in promotion and growth for your brand, expanding your market share while keeping your brand’s fundamental proposition in mind.
Hiring a content agency can make this happen for you. Here at OMG, we help businesses to weather economic storms without harm and can even guide them to come out the other side stronger than ever. It all depends on the right strategy for marketing, as well as a savvy approach to investment. Reach out to our team to discover more.