09 Jan Why Data-Driven Marketing is Key to Thriving in a Recession

Posted at 21:56h in Digital Marketing by

As a marketing agency, we understand that times of economic uncertainty can be stressful for businesses. It’s natural to want to cut costs wherever possible, and advertising may seem like an easy place to start. However, we strongly recommend that businesses continue to advertise, even during a recession.

Henry Ford is a great example of why businesses should continue to advertise during a recession. During the Great Depression, Ford recognized the importance of staying visible and top-of-mind with consumers, even if they weren’t in a position to make a purchase. He continued to advertise his company and its products, including the iconic Model T and Model A, and even introduced the more affordable Model B in 1932.

Ford’s advertising efforts paid off – despite the economic downturn, the company’s sales actually increased during the 1930s. By continuing to advertise, Ford was able to differentiate itself from the competition and maintain its position as a leader in the automotive industry. This ultimately set the stage for the company’s success in the decades that followed.

As a marketing agency, it’s natural that we would be biased towards the importance of advertising, even during a recession. According to Nova ad spend is down 33% on social media and 30% on paid search. However, the data doesn’t lie – numerous studies and surveys have shown that cutting advertising budgets during a recession can be a mistake. Businesses that maintain or increase their advertising efforts during tough economic times see an average increase in sales, while those that cut their budgets see a decline in sales.

Benefits of continuing to advertise during a recession:

  1. According to a study by Nielsen, businesses that increase their advertising during a recession see an average sales increase of 18% over those that cut their advertising budgets.
  2. Another study by McKinsey & Company found that companies that maintained or increased their advertising during the last recession saw sales increase by an average of 12% in the following year.
  3. A survey by the American Marketing Association found that 78% of consumers said they were more likely to try a new product or service during a recession if it was heavily advertised.
  4. A report by the Association of National Advertisers found that businesses that reduced their advertising budgets during the Great Recession missed out on an average of $4 in sales for every $1 they saved in advertising.

These statistics show that businesses that continue to advertise during a recession can see increased sales and a strong return on investment. In contrast, businesses that cut their advertising budgets may miss out on the opportunity to capture market share and set themselves up for success in the long run.

Why should businesses advertise in times of recession: 

Increased competition: When the economy is struggling, more companies may enter the market or ramp up their efforts to capture a share of the shrinking pie. By continuing to advertise, your business can differentiate itself from the competition and attract customers.

Cost effectiveness: Advertising can be a cost-effective way to reach a large audience, especially when compared to other marketing tactics like direct mail or salespeople. In a recession, every dollar counts and advertising can provide a good return on investment.

Building brand awareness: A recession is a great time to build brand awareness, as consumers may be more likely to try new products and services when they are looking for deals. Advertising can help your business stay top-of-mind with consumers and position itself as a go-to brand.

Staying visible: Even if consumers aren’t in a position to make a purchase right now, they may still be interested in your products or services. By continuing to advertise, your business can stay visible and top-of-mind with consumers, setting the stage for success once the economy recovers.

Why cutting your marketing budget during a recession is a mistake: 

  1. According to a study by Nielsen, businesses that cut their advertising budgets during a recession saw an average sales decline of 27% compared to those that maintained or increased their advertising.
  2. Another study by McKinsey & Company found that businesses that reduced their advertising during the last recession saw a decline in sales of an average of 6% in the following year.
  3. A report by the Association of National Advertisers found that businesses that reduced their advertising budgets during the Great Recession missed out on an average of $4 in sales for every $1 they saved in advertising.
  4. A survey by the American Marketing Association found that 59% of consumers said they were less likely to purchase from a company that had reduced its advertising during a recession.

These statistics show that cutting advertising budgets during a recession can lead to a decline in sales and a missed opportunity to capture market share. In contrast, businesses that continue to advertise during a recession can see increased sales and a strong return on investment.

While it may be tempting to cut costs wherever possible during a recession, advertising can be a cost-effective way to reach a large audience and differentiate your business from the competition. Ultimately, the decision to advertise or not is up to each individual business, but the data suggests that it can be a wise move.

In short, advertising can be a powerful tool for businesses looking to stay competitive, reach a wide audience, and build brand awareness, even during a recession. Don’t make the mistake of cutting your advertising budget – it could pay off in the long run.