Advertising in a Recession

Even during an uncertain economy, business must go on in order for the economy to recover, and thrive again. Consumers everywhere are concerned and feeling anxious about the final outcome of this COVID-19 induced quarantine. We’re already seeing the economic impact from restaurants, bars and businesses being closed. In addition, the transition to working from home, layoffs and furloughed workers has wreaked major havoc on our economy.

However, it’s been proven that brands that continue advertising and marketing during a recession end up fairing better in the long run. When marketers cut back on ad spending, brands lose their “share of mind” with consumers, with the potential of losing current – and possibly future – sales.

Marketing during an Economic Downturn

In times of recession, consumers prioritize their consumption of products and services by allocating their spending based on necessity. According to an article in the Harvard Business Review: “All consumers consider basic levels of food, shelter, and clothing to be essentials, and most would put transportation and medical care in that category. We know from previous recessions that products and services such as restaurant dining, travel, entertainment, new clothing, automobiles, appliances, and consumer electronics can  shift quickly in consumers’ minds from essentials to treats, postponables, or even expendables, depending on the individual.”

Even in hard times, people still need access to food, gas, and daily essentials, such as the heavily hoarded, toilet paper. When companies make sharp cuts in advertising budgets during an economic downturn, the cost to regain share of voice once the economy begins to recover, can cost four to five times more than what was saved. A better strategy is to remain constant, to try and understand customer needs, and respond accordingly with customized advertising messaging.

Brand Value Equals Cash Flow

According to a Yahoo Finance article, 74% of U.S. business economists believe the economy will tip into a full-blown recession in 2021. Slashing advertising budgets can make things worse. It’s betters to consider ways your brand or business can offer more value to consumers.

Poor economic forecasts also erode buying power. So, when consumers lose confidence in the market, they’re more likely to adjust their buying behavior. Therefore, value becomes top of mind for consumers who are already feeling cautious, both personally and professionally. Value becomes the key component in allowing brands to maintain consumer loyalty and keep the revenue stream flowing.

This is what marketers should consider when developing brand messaging in a recession. Take time to figure out what makes your business or brand different. Think about what you can offer that no one else can. If your brand can support consumers during tough times, those same consumers will more likely commit to you – and your brand – in good times.

“A man who stops advertising to save money is like a man who stops a clock to save time.”

—Henry Ford

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Photo Credit: Forbes