Marketing Spend During a Recession: The Shocking Truth Backed By 1,000+ Real Company Results

Into this fray, Toyota debated what to do about marketing, including considering cuts to the advertising budget. Skyrocketing fuel prices and inflation plagued the U.S. economy for several years in the mid-1970s. The investment in snap, crackle and pop paid off, with Kellogg’s profits increasing 30 percent and the company becoming the market leader. At the same time, Kellogg’s doubled its advertising, with large investments in radio ads and positioning of its new product, Rice Krispies. In the 1920s, it was a rival company, Post, that had the most market share in ready-to-eat cereals.

The 2020 COVID-19 recession may have only lasted two months, but the impact it had on advertising was devastating. With the recent steady flow of gloomy economic data, many are preparing for the worst, and that could deliver a big blow to the robust advertising recovery following the 2020 downturn. During times of economic contraction, businesses tend to pull back on what is considered discretionary spending. Talk to our team about how Rockerbox can change the way you spend—for the better.

As McKinsey and Company put it, “Bubbles pop…” but, that’s not all they said, they finished that sentence with, “and downturns stop.” The3 company advertising digital books as a less-expensive, more convenient option and consumers bought in. During the Great Recession of 2009, the company actually saw its sales grow by 28 percent. Instead, the company chose to lean in to its advertising, emphasizing its line of fuel-efficient vehicles and smaller cars.

Advertise risk-free options, waived cancellation fees or special sale pricing during times of uncertainty. Lastly, adapt your creative message to the current climate. Incorporate tracking measures so you can monitor results and adjust your media plan accordingly. Compare results, and see which media outlets are generating the biggest return.

Contractions, downturns, and even full-blown recessions are inevitable, so getting ready for the bad times during the good ones is key to business stability. Here’s what you need to know about marketing in a recession, plus tips to help you navigate economic uncertainty and target long-term business growth. Customers are unlikely to commit to anything that feels risky in trying times, so invite them to make a purchase they can be comfortable with.

How Leading Broadcast Sales Teams Are Hitting Bigger Goals With Leaner Resources

• Maybe an off-handed comment on social media contains a creative key that can unlock your next campaign?
• Multiple technologies exist to tackle this tenacious task, but it’s often approached with an efficiency mindset, rather than a mindset focused on effectiveness.
• Kantar recently released a report on the top ten drivers of advertising profitability, and second to brand size, creative quality was listed as one of the main factors influencing the efficacy of an advertisement.
• If an agency multiplied the amount of man hours they took to create one marketing report by hand, and multiplied that figure by their list of accounts, the math would quickly show them that producing performance reports is a significant area of concern, particularly to the CFO.

Many farsighted companies have willingly offered free goods and services to mitigate the emergency or to shield their employees from insecurity. If people are demonstrating solidarity in adversity, then brands doing the same thing will earn their respect. This recession is unusual in that having a common enemy – COVID-19 – has generated a level of community spirit (toilet roll panic buying aside) that far exceeds that seen in previous recessions. This was characterized by a shift away from purely emotional advertising as advertisers felt more serious approaches fitted the mood of the people. This may change in time if the recession is deep and long enough, but because the most likely shape of recession is relatively short but sharp, we shouldn’t yet fall into the recessionary advertising mentality seen in 2008.

Recessions can also inspire new ways of messaging, setting trends that last for years to come. With several U.S. depressions in the rear-view mirror, it’s helpful to look back at how brands approached their marketing during tough economic times in the past. Fears of a recession are bubbling up in business conversations today as the economy slows and people grow cautious about spending. But this was much the same in 2008 and it was the brands that held their nerve – and share of voice – that bounced back strongly when recovery came.

That means you may be paying less for more in print, broadcast and digital advertising. By targeting your marketing dollars more precisely, you can preserve valuable resources while still reaching out to new audiences. What’s more, in an economic downturn, your customers are changing, too.

When you do decide to advertise again after a hiatus, unfortunately, you’ll have to start from scratch. Customers tend to react more quickly when they are familiar with you. While revenue among the three biggest social media giants has been declining since Q2 of 2021, digital ad revenue was still the advertising during a recession bright spot in the ad market. At the end of 2021, the economic recovery remained intact, and expectations were for additional growth in 2022. In 2021, global ad revenue surged 22% and reached a record high of $710 billion.

“The brands that continued to market through the last recession came out stronger when the recession ended because they were still top of mind for people.” Your marketing strategy might change, but you can’t stop trying to connect with customers. The problem is that research findings reflect market conditions, and conditions change quickly during recessions. Effective marketing strategies require accurate audience intelligence, and marketing teams invest in market research to understand target customer needs, preferences, and behaviors.

Advertising is the single most important action consumer brands can take during an economic downturn. Finding the right balance ensures that spending is properly allocated for reach, efficiency and frequency.” Those who did not advertise during the economic downturn saw 0% market share increase, and an increase in sales of only 18% (compared to the 256%) once the economy recovered. It’s natural to want to pull back all spend in order to survive. The world has faced several recessions in the past, and during these times, many businesses tend to reduce or cease their advertising efforts.

Simply understanding what has worked for your brand in the past will not be enough during an economic downturn. By identifying the most successful channels and strategies, companies can prioritize their resources and drive sales, even in tough economic conditions. By continuing to advertise, brands can differentiate themselves from competitors who may have reduced or ceased their advertising efforts, reach cost-conscious consumers, and prepare for post-recession growth. As consumer trends continue to favor value, it’s more important than ever for consumer brands to be in front of those consumers themselves. As consumers are increasingly concerned with their job security, cost saving and their lack of savings, brands will be left to pick up the change. That same study (August 2022) by Boston Consulting Group, found that though consumers were becoming increasingly concerned, they were not stopping their spending altogether.

How to support a brand during the recession

Speak the truth about the economic challenges they are feeling. During the last major economic downturn in the late aughts, the numbers were even worse. Businesses often choose to pull back on advertising and marketing during times of economic uncertainty.

Consumers become increasingly difficult to persuade into a purchase, and marketers face a more challenging task with limited resources. Businesses lose more money and respond with additional cuts. This can also create a feedback loop that increases the severity and duration of a recession. Recessions decrease market demand, which makes it harder to attract and convert customers. Recessions put more sustained pressure on businesses and consumers than slowdowns and shorter downturns, and they can be more damaging as a result. “Whether we are or aren’t in a recession, thinking about it or starting to think about it is probably a good idea,” says Melissa Cabral, head of strategy at Sid Lee USA, a full-service advertising agency.