Why Investing in Good Marketing Is Critical During Economic Downturns

Many businesses are experiencing noticeable drops in leads and conversions that are affecting their bottom line. There is a climate of uncertainty, and it’s understandable that business owners feel the urge to pull back on expenses. 

However, while it is always prudent to trim unnecessary spending, marketing should not be considered an “extra” cost: During economically challenging times, it is even more critical to invest in getting your business in front of potential customers.

Here’s what we’ve learned from watching economic downturns over our 20 years of digital marketing industry experience.

Understanding the economic downturn

In any downturn, spend some time understanding how the economy has changed and who has decreased spending power. Currently, inflation is a serious concern, interest rates aren’t great, consumer confidence has been on a roller coaster, and certain businesses are feeling the pinch—especially if they have high cost, elective services that depend on credit-based buyers. 

Even businesses that retain excellent search engine rankings may see a temporary drop in leads and conversions in this economic climate.

It’s a common reaction for businesses to start trimming budgets—however, we contend that while your marketing budget should be carefully allotted, cutting it will do more harm than good in a challenging economic climate. Here’s why.

Visibility is more important during a downturn

When the going gets tough, it’s crucial to stay visible. Importantly, your competitors scaling back presents an opportunity for you to stand out. Consistent marketing efforts can help build and maintain customer trust and loyalty, even in challenging times. Moreover, economic shifts often bring new opportunities—by staying active and engaged, you can seize these opportunities and position your business for future growth.

The risks of cutting marketing budgets

Adding to the importance of staying visible throughout economic changes, consider the risk of  several long-term issues that that are proven to be associated with marketing reductions:

• Loss of momentum: Marketing is about building and maintaining momentum. If you pull back, you will be losing progress you’ve made, as well as make it harder for your business to regain traction when the economy improves.
• Competitor advantage: While you’re cutting back, some competitors will continue their marketing efforts. This gives them an edge, allowing them to capture more market share for both now and in the future.
• Recovery time: Once the economy rebounds, it will take significantly more time and effort to regain the ground you’ve lost if you cut back your marketing efforts.

Consider using value-focused propositions in your marketing, as well as cost-effective tools like email campaigns and customer referral discounts.

Effective marketing strategies during economic downturns

So, what can you do? Here are some marketing strategies to consider:

• Shift to the most cost-effective tactics: Apply budget-friendly marketing strategies such as offering customer referral discounts, hosting events, and sending targeted email campaigns to past customers.
• Focus on providing value: Highlight the value and benefits of your products or services. During tough economic times, consumers become especially cost-conscious and will want to know they are getting a good value for their money—why is your business the best investment, offering the best quality? What extras can you offer customers that will have them singing your praises to others?
• Find niche audiences that are still converting during a downturn: All audiences are not the same. In a downturn, look for groups with different motives for buying your services and then deploy new work that aims at these smaller niche groups that you might ignore in a normal economic climate.
• Increase customer engagement: Keep your audience engaged and informed with regular updates via newsletters and social media interactions—or even direct notes to customers!
• Make data-driven decisions: Use analytics to make informed marketing decisions that optimize your budget.
• Spend on marketing work that creates long term advantages. Build a moat around your business that competitors are unwilling to duplicate and you will benefit when the economy rebounds. Long term efforts like writing a book, building a micro-site, lining up future TV appearances, sponsoring an event in the future are all good marketing examples of work with a longer payoff. 

Want to navigate these challenging times with the strategic guidance of a smart marketing firm? Cake is a full-service marketing agency, founded in 2001, offering expertise in medical marketing, cosmetic medicine, medical boards, and marketing for attorneys. Reach out to the Cake team and we’ll help you tailor a marketing plan that helps your business to not only survive, but thrive.