You’re all aware that these are challenging times. Barely a day goes by without some grim prediction about the economy. So, we won’t lose the point.
It’s safe to say that there is a lot of uncertainty out there. But one thing is certain: cutting your marketing during a recession is a provably suboptimal move.
It’s not just that these types of cuts hurt your brand visibility, meaning you aren’t positioned to take advantage when the economy rebounds. It’s also that even during a recession, changes in consumer behavior create new and exciting opportunities. On top of that, it can be a time to strike while your rivals are weak and failing to get their message to the public.
That’s the theory, anyway.
In reality, when consumer spending is down, it gets hard to justify your marketing budget to the C-suite, which is why you need to take a unique approach when evaluating marketing during a recession.
Ensure you’re spending enough
Last year, the leading global marketing firm Nielson produced a report on marketing ROI. One of the report’s findings suggested that “50% of marketers’ media investments are actually too low to drive maximum payback.”
Their position was that if firms were already suffering sluggish sales due to underspending, cutting back due to recessionary worries would produce even worse results.
Nielsen cited an example that suggests that underfunded ad campaigns spend most of their money on showing an ad 1-2 times to a wide audience.
Marketing theorists have all sorts of ideas about the optimal number of ads that are needed to create an impression. Some people say three is good, while others cite the Rule of 7. Either way, according to Neilsen’s research, low ad spend campaigns cross neither threshold.
So, if you want to evaluate your marketing accurately, ensure that you are spending enough in the first place to get an accurate picture. Slashing your budget will just slash your revenue.
Beware the year-on-year comparison
Year-on-year comparisons are a great way to gauge the long-term success of your marketing efforts. However, if we look at EU consumer spending, we can notice a pattern.
Consumer spending in 2023 has held firm. It’s slightly dipped from June 2022’s heights, but if we correct for inflation, we can conclude that the value of 2023’s income is less.
However, comparing marketing performance year-on-year won’t always get you to the truth. Different years have different contexts, and seismic economic events like a recession will affect your marketing results.
So, if your ads aren’t producing like they were in 2022, it could be because of macroeconomic conditions. Or, it could be about messaging. For example, consumers are worried during an economic downturn. They are concerned about their jobs and feel less free to throw money around. As such, they respond to different approaches.
Essential goods retailers can do well during these times by emphasizing the value or cost savings associated with their products. So, if you want to measure the effectiveness of your marketing during the downtimes, ensure you have selected the right message first. Then, you can tentatively compare year-on-year rates to see how you are doing.
Understand what an economic downturn means for different audience segments
People still spend money during a recession. It’s just that they rotate away from specific items and into other areas. Thankfully, we all have lots of data on customers now, which can help take some of the guesswork out of adjusting both your marketing message and channels.
Demographics like age or income level are useful. However, it’s worth digging a bit deeper and looking at audience segments, too. Then, the key is to really understand how these specific segments are affected by an economic downturn. You can also stumble upon groups whose behavior is not changed in the slightest by economic concerns and make them a bigger focus on your ads.
Customer surveys can help here. By asking the right questions, you can gain a deeper understanding of what makes your customers tick, especially during these stressful times. By learning about their concerns, you can generate a more empathetic type of branding.
Overall, once you have the context for your market segments, you can start to emphasize or deemphasize your targeting.
Audit your ad spending for effectiveness
Ad spending during a recession is about maximizing ROAS. So, it’s a great time to do a full-on audit of your marketing and find out what works and what doesn’t. Really dig deep and get granular in a way you have never done before.
Business analytics tools driven by machine learning are adept at pulling patterns from data that humans would struggle to see. If you don’t have the time or resources to do this yourself, Amanda AI effectively does this in real-time, thanks to our impact-driven effect model.
Upsell, cross-sell, and remarket
It’s well known that it’s easier and more profitable to sell to your existing customers. So, analyze your marketing objectives. If you’ve been on a crusade to acquire new customers, it might be time to take stock and focus on your existing base. If you need quick, revenue-generating wins, explore adding email marketing to your current list as a low-cost channel.
Similarly, remarketing or retargeting on social media can work. A lot of these audience segments are already familiar with your brand. They may even be ex-customers. If you’ve got some affinity and maybe even a little goodwill to draw upon, your conversion rates could be higher, which should mean a better ROAS.
As EuroZone growth forecasts are cut for 2023, it’s getting harder to escape the gloomy news. Business owners are feeling the pressure, but consumers still need goods and services. Sure, a recession (or even simply a fear of a recession) has an effect on consumer behavior, which means you need to modulate your marketing. That starts by evaluating your performance within the right context, learning lessons, and making adjustments.