Economic experts suggest that we are set to slip into a recession by winter and that it will last into 2023 – and perhaps beyond. Reduced spending power means that consumers will shop less. Additionally, what little money they do spend will be directed towards necessities, like food, rent, and energy.
But what does this all mean for marketing teams? Can they find a way to drive revenues during this difficult time?
Marketing during a recession
Apart from a two-month dip during COVID, since the 2008 financial crisis, we’ve lived through a remarkable economic growth period. Over that time, many marketing teams attributed their sales growth to a great product, snappy copy, and audience targeting.
However, as we’re all going to find out, buying is also driven by other factors. Confidence, economic trust, and disposable income greatly influence consumer behavior.
So what happens when a recession hurts those factors?
For starters, businesses and consumers have become more cautious. They do more research before investing in products—additionally, the type of products they buy changes. Discretionary spending declines. Retail, restaurants, and tourism take a hit as consumers focus on necessities.
For marketers, a recession brings additional problems. Most notably, an increased pressure to justify ROI on marketing spending. The looming economic slump has come at a difficult time for marketing teams already facing a customer acquisition cost crisis.
The rise in customer acquisition costs
High inflation and interest rates have become difficult for digital marketing teams.
The digital marketing landscape has become very competitive. Over the last decade, more businesses have realized how powerful digital marketing is for connecting with their target market. The downside of this is that customer acquisition costs have grown sky-high as more businesses compete for limited advertising space.
Additionally, privacy restrictions and the death of the marketing cookie have made advertisements less precise. Marketing teams used to be able to target their prospects with surgical precision, but this process has become more difficult. As a result, the costs of acquiring customers have shot up.
Why ROI should be marketers’ first concern
Marketing and advertising are just like any other investment. It only makes sense to spend the money if you are sure it will bring you a good return.
Now that marketing teams compete for a smaller slice of the pie, they need to be more efficient. Return on investment is central to driving revenues and profitability.
Let’s look at a few ways your organization can boost marketing ROI.
Automation is a great way to increase ROI. Many businesses will need to do more with less in this economy, and automation offers a way to free up your employees to do other creative tasks.
Additionally, automation reduces the possibility of human error. You can be sure that your marketing efforts will be implemented in the most precise way possible, which can ensure no wasted spending.
Measure each channel
Measurement is crucial for securing a good ROI. You need to know what content and channels are getting good results and which are underperforming.
Once you have a good grasp of what is getting results, you can allocate money to high-performing channels. Similarly, you can take money away from poor-performing channels.
This concept is simple, but many businesses still don’t get it right. And a big part of that is an inability to evaluate the performance of each channel effectively.
Take charge of your marketing
An interesting recent report on agency marketing showed that almost 60% of brands are improving ROI by bringing their marketing in-house. While marketing agencies can provide excellent results, some customers report pricing transparency and efficiency issues.
Sophisticated modern marketing tools and analytics programs are making a move in-house more viable. Instead of paying agency fees, you can reduce your marketing spending and ultimately still win more customers.
Explore alternative attribution models
The death of the cookie has made attribution more difficult. When you don’t know what creatives, channels, or platforms are driving sales and revenues, it’s easy to invest in the wrong areas. And continue to invest in the wrong areas.
Consider alternative models, like Mix Marketing Modeling, to help you gain an edge.
Think about dark social
Dark social refers to the social media shares and engagement about your brand in channels your attribution software can’t detect. In many ways, it’s where demand for your business is generated. So think about ways that you can engage in these spaces.
Personalized marketing is an effective way to cut through the noise. If you have a good handle on your ideal customer persona or demographics, consider running smaller, more targeted campaigns that engage tight audience segments.
According to McKinsey, three in four consumers cited personalization as a reason they consider brands. In the same report, almost 80% said personalization would cause them to repurchase from the same company.
A/B test your ads
If you’re not doing this already, you really should be. A/B test variations of your ads, experimenting with ad copy, creatives, messaging, and more. Then run the version that gives you the best ROI. Lean towards platforms and marketing automation tools that offer this feature as standard.
How Amanda AI can help you weather the recession
Getting a return on your advertising spending is more important than ever. Consumers are spending less, which means businesses compete for smaller revenue.
Amanda AI was built to maximize ROI. It can help in several ways.
- allows you to automate your marketing and free up your time
- runs countless experiments on your ads, ensuring your use the best-performing versions
- helps you take control of your marketing by ruthlessly optimizing your efforts
- ensures that your marketing spending is efficient across different channels
- uses effect-based attribution to ensure you’re investing in the right way.
- eliminates human error, lowering the chances of wasting ad money
In these challenging financial times, marketing teams must use money wisely. Amanda AI’s sophisticated marketing tool allows you to do more with less, ensuring you get the most from your ad budget.
So take control of your marketing and use Amanda AI to outwork your competitors and drive down your customer acquisition costs.