As governors across the country begin to reopen their states, business owners are re-examining their marketing budgets. But will recession marketing create an opening for you to reach new customers? Countless examples from history say yes. Entire industries are dealing with intense risks. Millions of Americans are preparing for extended unemployment. Business leaders, economists, and elected officials are predicting a major downturn for the global economy. Despite all this – or in fact, because of it – the time is now to expand your marketing budget.
Historians have counted at least 47 U.S. recessions since the mid-1800s. During a recession, the first major expense that a company cuts is typically its advertising. After the economic downturn in 2008, ad spending by U.S. companies fell by almost 13%. Today, we have access to almost 100 years of data that correlate short-term budget cuts with long-term market loss. The results have consistently favored companies with a long-term strategy in mind.
Recession Marketing Throughout History
There are a few examples of brands that catapulted to newfound success with recession marketing. Going back nearly one century, these brands demonstrate the benefits of recession marketing. Those advertisers that maintained or grew their ad spending increased their sales and market share during the recession and beyond.
In the 1920s, Post Cereal was the industry leader when it came to ready-to-eat breakfast. During the Great Depression, though, Post significantly shrank its marketing budget. Rival Kellogg’s Cereal during this period doubled its ad spend, investing heavily in radio. They even introduced a new cereal called Rice Krispies with colorful cartoon mascots. This move led to Kellogg’s growing its profits grew by 30%. Fast forward to today, Kellogg’s is still the the category leader, a position it has enjoyed ever since.
The two-year American recession of 1973-75 was a consequence of the global energy crisis. Gas shortages became a normal part of life. At the end of 1973, the Toyota Corolla was second to the Honda Civic in fuel efficiency for the first time ever. Because Toyota was boosted by strong sales, their initial urge was to drop their ad budget. They resisted. By sticking to its long-term marketing strategy, Toyota eclipsed Volkswagen as the leader in U.S. car imports by 1976.
Fast Food Restaurants
In the recession of the early 1990s, Taco Bell and Pizza Hut jumped ahead when McDonald’s decided to limit its advertising budget. During this market reorientation, Taco Bell and Pizza Hut increased their sales by 40% and 61%, respectively. McDonald’s sales, meanwhile, declined by 28%.
It’s easy to see that recessions are a golden opportunity to expand if you play your cards right. Don’t get swept up in the wave of businesses buried under the next economic downturn. Follow these tips to make sure you come out of the recession on top:
Take advantage of lower advertising costs
Advertising costs are already below their market average. With so many more Americans at home, cost-per-click metrics for both Google and Facebook are at record lows. There are fewer companies taking up inventory, which translates to fewer companies competing for consumer attention. That essentially means that paid media is cheaper and trending to stay this way for a while.
Social media platforms make a huge share of their revenue from advertising. Ad inventory is always available. Expert advertisers can take advantage of this newly saturated market to reinvent their brand at record low media costs.
Adapt to trending media platforms
Savvy brands look for ways to stay topical during difficult economic times. Today, millions of consumers are working remotely, shopping on Amazon, and communicating through video chat applications. This allows smart advertisers to create new opportunities where they can display empathy and connect with their consumer base. Only those who stay ahead of the volatile marketing environment will emerge unscathed. Interactive web design is a great example of a consumer-centric approach to meet heightened demand.
Expand your audience
During a booming economy, major brands have powerful budgets to experiment with their advertising strategy. This approach that makes media more expensive for smaller businesses to try and compete. As big brands reduce their spending, there is no clutter to cut through. Small businesses have an opportunity to speak candidly about a product or service. Once the economy returns to normal, you’ll have gained an entirely new customer base. Furthermore, this base will be difficult and expensive for your competitors to steal back.
Display strength through branding
Brands can project to consumers what we need most now: leadership, confidence, stability, and entertainment. Governments play a huge role in this, but brands that demonstrate strength always leave a lasting impression. We tend to forget the brands that go dark. To better compete, promotional offers and inspiring content can convey feelings of authenticity and security. Similarly, interactive web marketing can produce a visual appeal to capture new customers in your sales funnel.
Knock out your competition
Many small businesses have a limited budget for recession marketing. During a recession, it’s easy to hold back on advertising for short-term gains. But all that really accomplishes is to create a market opening for more savvy competitors. With effective interactive web marketing and interactive web design, companies can step in and build relationships with customers at their most vulnerable times. This also presents a significant opportunity for a brand to reposition and introduce new goods or services.
Recessions will always pose a fundamental risk to your livelihood. We can look to the past and see how others have navigated recession marketing. When we do, it’s clear that reducing ad spend will do more harm than good. Brands that stay the course get a long-lasting boost. By expanding your market share, you better position yourself for future recessions as well.
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About Worcester Interactive
Worcester Interactive is a full-service digital marketing firm in Worcester, MA, specializing in responsive web design, social media marketing, search engine optimization (SEO), and digital advertising. We build websites and create online marketing campaigns for businesses looking to grow their online presence. We love taking on challenging projects that require full-on content strategy, thoughtful design, demanding development, and ongoing, interactive web marketing.