The Benefits of Marketing in an Economic Downturn
Most media outlets agree that if we’re not already in a recession, we’re certainly heading toward one. Inflation is up. The cost of living is soaring. And businesses have to make some difficult decisions, including deciding what to invest possibly limited funds in, to make it through the next financial term. It can be tempting to cut costs around marketing, especially for businesses that aren’t seeing the best sales or engagement right now. Here’s why that’s the worst idea right now.
Growth Is Possible in a Recession
The widely accepted definition of a recession is two consecutive quarters of negative gross domestic product, or GDP, growth. However, the National Bureau of Economic Research (NBER) defines a recession differently, stating that it’s a significant decline in overall economic activity. Which definition you use dictates whether you think we’re in a recession right now. Regardless of the differences, there’s no escaping the fact that it’s a tough time for many businesses. Industrial production is in decline, supply chain issues cause problems all over the world, and the stock market is plummeting as inflation soars and investors tighten their purse strings. How can businesses stay optimistic about growth right now?
Back in 2019, Harvard Business Review assessed the possibility of a future recession and how savvy companies could not only survive, but thrive. One of the primary outcomes of their study was that businesses that focused on investing in growth rather than cost-cutting would likely be more successful. In fact, the companies with the best returns were those that managed to balance cost-cutting strategies with growth-investment initiatives.
Focus on Long-Term Results
The overall theme of the study was that businesses should act in the moment to deal with immediate challenges, but always with a view to what the long-term results of these actions would be. Investing in marketing can lead to short-term revenue increases, but also has other benefits, including:
Creating a compelling brand story
Increasing engagement across multiple platforms
Generating leads that may convert further down the line
Building relationships with other businesses, partners, and investors
Increasing traffic and awareness of your product or service
Some of these points might not be immediately profitable, but they will absolutely increase ROI over a period of several months. Let’s take a look at some of the most successful enterprises that managed this during previous recessions.
Successful Companies That Knew to Invest in Marketing During a Recession
Netflix and the 2008 Recession
Netflix is perhaps one of the great examples of adapting to change during difficult economic times. In 2007, DVD rentals were dying off, which were the primary source of income for Netflix at the time. Netflix both began marketing Blu-ray discs to customers and started the streaming service that is now a household name. Thanks to robust marketing and a willingness to embrace emerging technologies, Netflix was more than ready for the 2008 recession. Today, Netflix invests over $2.5 billion a year into marketing, and the company famously created one of the first successful algorithms for making suggestions to customers on what they might like to watch next.
Proctor & Gamble’s Post-War Success
Nearly 100 years ago, the Great Depression decimated businesses and drove investors and bankers to despair. However, many businesses thrived — largely the ones that continued investing in advertising and marketing campaigns. Proctor & Gamble’s Oxydol sponsored easily digestible radio serials in the 1930s, and this is where we get the term "soap opera" from. Proctor & Gamble will celebrate 200 years of trading in 2037, so clearly its choice to invest during a recession was the right one.
Samsung’s Continual Growth
A 2019 study used Samsung as a clear example of marketing success during a recession. During the last major period of economic downturn, Samsung was number 21 on the global list of top brands. By the time the economy picked up again, Samsung had achieved the incredible: It was now the sixth most recognizable brand in the world. The study stated that success was due to continual investment in marketing rather than cutting costs.
Final Word
Angela Ahrendts of Burberry once said, “Never waste a good recession.” Whatever stage your business is at, creating compelling marketing strategies is the absolute best way to recession-proof your company. Bringing a fractional CMO on board could give your business the executive-level drive to hone your marketing campaigns, ensure your marketing teams are working cohesively, and really work toward long-term growth. Book a 15-minute introductory call and find out more about how we can help you thrive, even when the economy is struggling.
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