Conventional Wisdom Suggests It’s Time to Start Preparing Your Marketing Budget for a Recession. Here’s Why You Shouldn’t

By Ryan Christiansen On Apr 8, 2020

Even the top of the world isn’t immune to the Coronavirus. China has shut down, the Tibet side of Mount Everest and Nepalese authorities have ended all expeditions on the South flank for the rest of this year’s climbing season amid the worsening global pandemic. It’s increasingly becoming apparent that the coronavirus is going to cause an economic slowdown.

The travel industry has been sent into a spiral. Conferences and major events such as SXSW have been canceled. Even college and professional sporting events are being suspended or postponed. But the disruption is a potentially necessary step in order to confront the greater issue of contracting the illness that has claimed thousands of lives worldwide.

If economic turbulence keeps up, will there be a recession this year?

As businesses tighten their spending and brace for the worst, let’s take a look at the consequences of standing on the sidelines. The dangers of not doing Marketing can have a long-term impact

Here are just a few considerations if you decide to pull back your Marketing spend:

Loss of Market Share:

The American Business Press and Meldrum & Fewsmith’s look at the 1970 recession showed that “sales and profits can be maintained and increased in recession years and in the years immediately following by those who are willing to maintain an aggressive marketing posture, while others adopt the philosophy of cutting back on promotional efforts when sales appear to be harder to get.”

This study and multiple others suggest advertisers that they maintained or grew their ad spending increased sales and market share during recession years. When there are fewer consumer dollars going around, you have to set your sights on getting a larger piece of the pie if you want to come out the other side stronger.

Losing Credibility:

The first reaction during an economic downturn for most businesses is to cut budgets. Customers aren’t buying as much and sales forecasts are being downgraded, which means businesses have to find costs to eliminate to stay above water.

But when marketers curtail their ad spending, they’re putting the future business at risk. According to McGraw-Hill Research’s look at the 1985 recession, companies that either maintained or increased their ad budgets during that time experienced a 256% increase in sales versus companies that cut their ad budgets. Brand-building will benefit from a sustained media presence, but with appropriately modified messaging.

Problems Attracting New Customers:

Any brand considering linking itself to a public health scare will have to first ask if they have an authentic association with it and if they have a role to play in helping – at the end of the day it’s about making sure ads are sensitive to the outbreak. The perception of ad messaging should be intended to serve the best interest of your clients or customers.

Given the circumstances, people are confused about how exactly how they should act (e.g., shoppers across America are buying large quantities of toilet paper for fears of being stuck in quarantine), so brands need to be careful not to add to the confusion. Remember that people still notice advertisements during an economic recession, particularly if they end up spending more time indoors.

Hunkering down. Waiting it out. Standing by. These are surefire strategies for opening the door to further fiscal woes. If you are thinking to wait until the worst is over, think again. Your Marketing budget should adapt to fit your business, but the bottom line is that Marketing maintains, builds and strengthens the ever-important consumer-brand relationship. If it’s important when the economy is thriving, just think how much more critical it is during an economic downturn.