To Spend or Not to Spend on Marketing During a Recession
As of mid-2023, inflation is high, layoffs in tech have started, and many prognosticators are calling for a recession towards the end of 2023 or early 2024.
Having worked in the tech industry for over twenty years and lived through the dot com crash of 2001 and the Great Recession of 2008, I’ve seen firsthand how companies ax marketing first and foremost when times get tough.
In fact, it’s almost become an unspoken best practice: cut marketing first, finance last.
I often tell people that agencies are the canary in the coal mine. When our business starts to shrink, dark clouds are on the horizon.
I’d like to offer three reasons why I believe it’s wrong to cut marketing during a recession.
First, one of the main goals of marketing is to generate sales. And isn’t that what’s needed the most during an economic downturn? Rather than focus on laying off staff, how about looking over all marketing personnel with a fresh eye to make sure that everyone is focused on sales and ROI. Examine marketing spend and delay or eliminate items that aren’t directly related to the main goal. Is that sponsorship of the golf tournament really necessary? Do we really need that large a tradeshow booth, or could we live with a hospitality suite and divert the saved budget towards a direct mail campaign?
Second, since your competitors will most likely be cutting back their marketing spend, you may find marketing costs lower during a recession. Advertisers may be more willing to bargain and offer you some hot deals on placements and packages since their sales will be hurting. Negotiate hard, and even look to lock up some long-term packages that might carry over even after the economy rebounds. In other words, be the company that buys the Christmas tree in January. Or as Warren Buffett puts it, “be fearful when others are greedy, and greedy when others are fearful”.
Third, sometimes the way to succeed is to zig when everyone else is zagging. When will a better opportunity come to hit your prospects harder than when your competitors are cutting back their advertising, marketing or public relations? I say use this against your competition. Take this opportunity to blitz the market, and watch your momentum carry over into the good times.
If done correctly, you can make lemonade out of lemons by spending judiciously but aggressively during a recession. Then, when the economy inevitably swings back to growth mode, you will be ready to shoot out of the gates
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