Navigating Our Economic Storm
Perhaps I’m just another victim of the news cycle or maybe I’ve just been through this a few times in my fifty-plus years traveling around the sun but it seems to me that we just might be in for a rough economic road here in the near future. And by near-future, I mean next Tuesday or sooner.
Recessions are defined quantitatively, meaning that certain indices need to reflect specific data before we allow reporters to use the R word. The gross national product (GDP) typically has to show two consecutive quarters of negative growth in order to qualify for a recession. During first quarter, the GDP pulled back by 1.6% which is 17% less than my stock portfolio declined. On top of all that we can see the effect of high gas prices on everythings as even a bag of Skittles is way more than it used to be.
Speaking of Skittles, let’s remember too that our current and former political leadership dumped money into the market like candy. It’s no wonder that it now takes more money to buy anything and everything. This is the very definition of inflation. Unfortunately, the only way to fight inflation is with recessionary measures that slow demand.
Some good news shows U.S. manufacturing and non-farm payrolls showing growth while unemployment dropped from 3.9% to 3.6%. Consumer spending remains tepid and real personal income is actually pretty solid so perhaps we should all start watching less cable news and just get on with our lives.
So … a relatively mixed bag of economic news that, coupled with a Fed that is continually raising interest rates, tells me that a recession is inevitable. All of the aforementioned factors lend me to believe that it will be a moderate recession that is longer lasting but less traumatic than what we saw in 2008.
How do difficult economic conditions affect your marketing efforts?
In simple terms, a slowing economy means that you’ll see a corresponding decrease in your profit margins. Given all that we talked about in the first five paragraphs, it does seem like pretty much every industry will feel some effects of the pending slow down.
It’s not the least bit uncommon for companies to respond to difficult economic conditions by cutting expenses. Marketing is an expense that can be cut with seemingly less pain than other expenses that companies incur. Oftentimes, it’s the first line to be affected when the economy slows.
I know you weren’t expecting that answer but you probably weren’t expecting lots of things these days. I wholeheartedly understand that difficult economic times require companies to cut their marketing budgets.
How do you effectively cut your marketing budget during a recession?
This, like many things, is much easier said than done. The complexity of attribution (figuring out what is working and what is not) is just that, complex. It’s particularly difficult with campaigns that have top-of-the-funnel push elements (billboards, pre-roll video, etc.) as well as pull elements (POS, pay per click, etc.). Since attribution is readily more evident with pull elements, brands tend to cut push elements first and deepest.
A better strategy is to take a much more holistic approach to cutting your marketing budget. What is happening in your industry? Any new trends? What are your competitors doing? Are there any new players in the space? Start there.
Next, look at your company and the marketing efforts you are currently putting forth. There are too many variables to address with one blog post but in general terms look at each component you are currently executing. Regardless of what type of marketing you’re doing, there are always ways to cut your budget responsibly.
Traditional Marketing Strategies in a Recession
For any type of traditional media look to flight your ads to help minimize expense. This can be done with each and every type of traditional media in the market. If you’re already flighting you may need to eliminate a station, move your schedule to be more seasonal or perhaps be even more judicious with your flighting. Adjusting platforms (i.e. moving from TV to radio) is also something to consider as long as you look at including congruent assets (like outdoor with radio) to maintain your top-of-mind awareness.
Traditional media is sold by vendors who hire deeply talented sales professionals. They know their stuff and they also know what’s happening in the world. Give your account executive (and perhaps their manager or better yet, media superhero Jim Knapp if he’s available) a chance to guide you to the very best way to maintain your brand’s presence while at the same time, cutting your budget. No one is happy with a budget cut but a good rep should know their product, know your brand, and most importantly, know how to get the most out of the budget you invest with them.
Digital Marketing in a Recession
On the digital side you should, if you haven’t already, make sure you are executing a properly structured email campaign as that is truly the most cost efficient way to engage your audience. Work to grow that audience and be sure you’re always providing value to someone’s inbox. Mind you cadence as opt outs are no bueno.
Learn more about email marketing here.
Organic social media is also the prize in the Cracker Jacks box when it comes to cost efficient digital marketing. The problems most brands have is that they don’t do this properly. This leads to low engagement, poor results and of course, nausea and vomiting. Paid social can also be a good move but it’s not for the faint hearted. Sounds self-serving but I do recommend the assistance of a good marketing firm with both paid and organic social media. You could otherwise be spinning your wheels and not accomplishing the important goal of making your marketing efforts more efficient.
On the SEM side I would recommend that any belt tightening be done with great scrutiny. Despite what your Google rep says a broad term search might not be right for you so tuning up your search campaign would be in order during difficult times. Of course, engaging in practical, search enhancing SEO is also highly recommended. Difficult economic times tend to bring out the worst in vendors. Use caution when you get served an ad from an offshore company stating that they can make you first in organic search while also making you two inches taller.
Want to read up on SEO? Click here to revisit our blog on the topic.
My not so final thoughts on marketing during a recession
Marketing is always easier when you have an unlimited budget. Having worked in media, marketing, and sports for 27 years I’ve yet to work with that client. I want to say too before we wrap up that some businesses can actually do well in difficult economic times. These exceptions can adapt well to the slowdown and perhaps offer a way for people to soften the blow of less money, less opportunity, and more stress.
ReThinc Advertising is one of those companies. We don’t welcome an economic slowdown but we are ready for it.
I personally believe that difficult times bring out the best in people with talent. My people have talent and as a company we’ve taken steps to prepare ourselves for what could be a challenging time.
Remember, “All captains show mastery in calm seas…” (thanks Bob Freeman). Stewarding your brand to marketing success during a recessionary period is possible, it’s just not easy. If your company needs help in evaluating just where to make cuts in response to these difficult times, contact me at email@example.com.