What Kind of Marketing is the Most Cost Effective During an Economic Downturn?
September 21, 2022
It is automatically assumed that an economic downturn means a marketing slowdown, but the two are not mutually exclusive. In fact, with a well thought out strategy under the right conditions can adapt new ways to attract audiences through strategic marketing efforts. This is why working with a media agency can be extremely beneficial when allocating budgets and shifts during and economic downturn. Here, we will explore the steps that are generally taken when reexamining budgets and goals during an uncertain market and industry.
How Should Spending Budgets be Adjusted in an Economic Decline?
The first step is to take the time to research and develop a strategy that works for a company’s marketing needs.
In this guide, we’ll discuss the importance of evaluating the current marketplace competition, where competitors are allocating their budget, and which strategies or channels are proving the most effective marketing. Covering niche marketing, long-term marketing efforts, preferred media formats, and more, you will be provided with the knowledge to create a marketing strategy that will deliver results, even in an economic downturn.
To understand how rapidly the market can fluctuate, consider the COVID-19 recession in 2020. Although it was only in the span of months, a decrease in business was seen in global ad spends. This industry saw a $25 billion drop in comparison to 2019. Looking forward, the market in 2021 drove to new heights, topping out at $710 billion in ad revenue. Now, the projection for 2022 follows the declining trend once again. The predictions from economists are varied and uncertain in terms of a possible recession, so it’s critical to take a detailed look at marketing strategies specifically and the need to adjust ad spend to not fall behind.
Surveying the Landscape: Evaluating Current Marketing Trends and Effectiveness
According to the experts, it’s expected that ad sales will continue to be fueled by economic growth and political spending. Once supply chain issues have been fully resolved, it’s anticipated that the marketplace will reach as much as $320 billion. According to Vincent Letang, the EVP of Global Market Research for MAGNA,
“The global ad market recovered above and beyond the economic recovery in 2021. Mature linear ad formats recovered to 90% of the pre-COVID level, just as the economy did. Digital ad formats, by contrast, grew much faster than expected, driven by multiple organic growth factors, e-commerce boom being the most significant. Traditional, brand- and privacy-safe media remain crucial to building consumer brands, as shown by the strong demand boosting TV costs in 2021, but marketers are increasingly diversifying into digital formats to reach hard-to-reach audiences, improve ROI and connect more seamlessly to e-commerce. This once-in-a-lifetime planet alignment of growth factors led to the unprecedented market growth we experienced in 2021.”
Growth factors include:
- Linear ad format (TV, radio, OOH, print, cinema, long-form video) saw a 9% growth
- Digital ad formats are being accelerated by changing lifestyles, business models, and media consumption methods, seeing 31% growth
- Digital ads make up 62% of all global ad sales
- In 2021, 68 of 70 markets surveyed saw double-digit growth
- The US market alone grew 25%, driving ad sales up to $284 billion
There’s a great deal of growth to be achieved, even as people worry about the potential of another recession. You can see the full details of the growth (and anticipated future growth) in MAGNA’s full report.
While there’s an increasing trend toward digital ad spend, it seems like almost all channels are seeing growth after experiencing the rollercoaster that was the 2020-2021 business year. One “trend” that we need to begin dissolving is the instinctual panic to pull ad funding— back in 2008, ad spending in the US dropped by 13% once the recession hit.
However, now is the perfect time to revisit marketing strategies, but it’s not time to hastily pull the plug on all ad spending “until things get better.”
Thanks to digital marketing, businesses and brands can now use ad spend dollars to work with agencies to improve their organizations. Studies dating back many decades show long-term success is dependent on successful advertising. During the 1980s recession, aggressive advertisers consistent with their marketing campaigns saw an increase in sales of 256% when compared to brands that stopped ad spend altogether. With accessible tools such as the Internet, it creates ease capitalizing on your ad spend and develop dynamic advertising campaigns even when you’re living on a recession-friendly budget.
Before diving into the tools that the Internet provides today, understanding the trends of search marketing and local optimization, as well as how they’re impacting advertising, marketing budgets, and overall brand visibility and marketing efforts is essential.
Search Marketing and Local SEO
Another timeless trend is search marketing. This tactic will continue to be vital to brands and businesses because it’s the singular way a marketing team can put their brand into the optimal position driving consumer purchasing and decision-making. Currently, local search optimization is quite popular. Brands are discovering how to get noticed by local audiences and which efforts are most effective.
Local optimization is about building brand authority. Search marketing done on a local and a wider scale, will help brands position themselves where they want to be found by the consumer. For example, if a new brand wants to come up in local search results, it would be beneficial to optimize content that follows the top local SEO practices. If reaching audiences that need help with DIY projects is the goal for a brand, writing a ‘how-to guide’ presenting the brand as an authority, would allow for products sell themselves.
These tools have proven to be extremely cost effective for businesses looking to achieve the highest SEO results. Outsourced work typically optimizes marketing budgets with local and general search optimization efforts. Similarly, to ad spend, optimization efforts cannot come to a complete halt when business declines just to continue when flowing freely. To build a successful, long-lasting, and consistently growing organization, its important to adapt and flow with the changes of business by refocusing and not just abandoning advertising efforts all together.
To that end, understanding which marketing channels are most successful in an economic downturn is vital, specifically in our current economy, narrowly surviving a pandemic shutdown, reduction in spending, and incredible loss of the labor force.
Which Channels Are Most Effective in These Times?
A large part of an optimized marketing strategy is going to hinge on determining which channels offer the most effective options when in a down market. Digital marketing is at the top of the list when considering effective options in a down market, but what channels and types of ads should be the focus?
The strategy taken in this case are dependent on goals, industry, and what types of ads generate the most traction for different brands and businesses. The most flexibility for this is in the digital marketing space due to online marketing being generally more cost effective than other marketing channels and efforts.
There are several channels in the digital space to consider, so insight on which will best suit a company and its marketing needs is imperative. Channels that are more effective for a specific brand will vary depending on the industry and which audience(s) are being targeted. For example, if you’re targeting males, ages 50+ for a dietary supplement, a TikTok video campaign might not be the best use of valuable advertising dollars.
Marketing efforts may be reduced by deciphering which cost the most. Cutting out the biggest expenditures (assuming they’re not your biggest earners) can provide a significant amount of room to go with your marketing, that you’re spending less on the various channels and media that you’re producing.
For instance, while prescriptions still do well with TV advertising, streaming services with ads and a high viewership in target audiences, marketing a new health supplement to young adults might be best done via podcasting or a social media campaign.
As much as marketing strategy should be about cutting costs and reducing media spend, it should also be about reducing what you can afford to lose—not just shutting down top-performing campaigns because they contribute to a large amount of your budget. Economists suggest that businesses struggling with figuring out how to manage ad spend in a downturn seek the counsel of a financial consultant or marketing agency that can assist with effective, efficient and goal-oriented marketing campaigns that don’t break the bank.
Of all the ways companies are saving money, digital marketing has become one of the best features for those who have a limited amount of funds in their advertising budgets.
Why Digital Marketing Thrives Despite Economic Struggles
While print and TV ads used to cost a significant amount of time and money to produce and purchase, digital marketing offers several affordable options to help companies build their brand advertising efforts even on a limited budget. Digital marketing truly removes the budget concern for most of the companies that choose it as their main marketing avenue. There are so many cost effective resources that come with digital marketing that it is legitimately accessible to anyone, provided they know where to find and how to utilize the available tools and resources.
Why is digital marketing seeing immense growth, despite a rocky economy over the past few years? Aside from the fact that it’s budget-friendly, it has also proven to have other beneficial aspects as well.
Agility and Scalability
Above all else, digital marketing is scalable and agile. It provides the ability to quickly change a banner ad, alter the frequency or content of your email marketing campaign, and often stop almost all marketing efforts in their tracks in less than 24 hours. There will be some areas that will be able to about-face and adjust in real-time.
That kind of flexibility is unique, and when producing content in-house, it is the best low cost option. In the midst of the pandemic, the business industry learned that being agile is no longer just a benefit but a must-have element in every aspect of business operation, including ad spend and advertising efforts.
Value for Money
Digital marketing also offers a better value for the dollars spent. As discussed, digital ad spend is more fiscally efficient than traditional advertising. The benefit is still having access to the same powerful ad space and campaign execution, but at a fraction of the cost due to using open-source tools, outsourcing to third parties, or doing the work internally versus absorbing the costs of contracting out.
In any capacity, most digital marketing tools are far more effective than their predecessors, and can be used for a fraction of the cost. The companies that invest in outsourced assistance with digital ad campaigns will be spending significantly less than if they were creating traditional ads and campaigns.
When you have more targeted efforts and fewer costs involved, a solution that offers less waste than other advertising efforts can be created. Digital marketing significantly cuts ad budgets and makes sure that every dime spent goes to the right place. Ad campaigns can be customized and spending can be assessed as needed, giving businesses the chance to do more and be less concerned about whether time, money, or effort on digital advertising is being wasted.
With less waste, you have a leaner operation, in turn meaning lower expenses and fewer allocated funds for ‘extra expenses’. That will provide the chance to spend the budgets that you do have in the right places for your company’s needs.
Search Marketing and Retargeting
As mentioned above, search marketing remains a timeless source of advertisement. Digital advertising and marketing efforts can be directly tied to SEO campaigns. Optimization efforts are essentially part of digital marketing strategies. Optimizing business online ensures that clients and prospective customers will be able to find your brand or business when they search for a relevant product, business, or service. The outcome creates a free stream of traffic when the work is done in-house, and a very low-cost one if you’re outsourcing the SEO to someone else.
Retargeting is also an important part of optimization and maximizing ad spend. It’s easy to retarget consumers who may have visited your site but not made a purchase, or even clicked through on an ad of yours, but then changed their mind and navigated away. With digital tools, businesses can monitor these consumer journeys and the corresponding events that lead to a consumer decision. This research will allow businesses to understand how to reach the consumer in a different way ending in a positive result for the company.
Retargeting in traditional advertising is difficult. There’s no direct way to have any insight on how many people have seen a particular newspaper ad, let alone who contemplated buying the product or service but then changed their mind, or why they did this. Simply put, there is minimal access to the type of information that would make retargeting as effective as it has become in the digital landscape.
Better Metrics and Reporting Features
When a print ad campaign is run, clicking a button to generate a report that tells you how many people saw the ad and which people made a move because the ad isn’t a reality. It takes time to see how the leads come in—and ask the leads where they came from. A way companies avoid this is to add a “mention this ad” disclaimer in their marketing. Still, it’s not the easiest to track.
Digital marketing efforts, on the other hand, are easily measured, monitored, tweaked, and reported in just about any interval desired by the company. Digital reporting tools make it easier than ever for companies to keep tabs on their ad spend, both through digital and non-digital channels. When companies can optimize analytic tracking, they can in turn, spend more efficiently. That being the ultimate the goal of every business—to get the most for their money.
As mentioned with retargeting, it’s imperative to understand and track the right information and users, as well as reaching them at the right point in their consumer journey—if unable to do that without real-time, rock-solid analytics and data that help you fuel each experience and drive the consumer toward conversion with your efforts.
However, businesses can still use many of the digital tools and tactics offered, not just the listed options. These are just the highlights that showcase how digital marketing can help a business or brand ensure that ad spend is optimized even during a recession.
Changing Mediums and Messaging: Is It Necessary?
The best channels in an economic downturn, let’s discuss what that means for current marketing strategies. Do businesses immediately have to throw out their whole marketing strategy and start from scratch? No. Revisiting and auditing the mediums used and the messaging communicated to make sure both are effectively getting the visibility necessary? Absolutely!
An economic downturn doesn’t mean abandoning all strategies. It means pause, revisit, make necessary corrections, and find the best way to the destination without running into obstacles along the way. Obstacles, in this case, are in the form of overspending on advertising at a time when counting the pennies proves to be extremely important.
Things to keep in mind when changing mediums or revisiting strategies:
- Is my message still getting engagement?
- Is my audience prevalent on my chosen medium?
- Where might I find new followers by exploring different channels and media?
- Which avenues offer the most value for the money?
- How do the current economic situation and forecast impact your current advertising and marketing strategies?
These questions will be able to navigate businesses toward an effective plan to move forward with marketing, even in a slower time. Despite how it might seem, this is the worst time for you to halt all marketing strategies. Plenty of other companies are pinching pennies, panicking, pulling ads, and reacting to the situation instead of being proactive about their approach. For businesses, this gives an advantage across all channels that maximize ad spend and minimize expenses when it comes to marketing.
What About Influencer Marketing?
Influencer marketing is a topic that’s been trending but still leaves many businesses confused and uncertain. Influencer marketing isn’t for everyone or every industry. However, some can benefit greatly from relying on the promotion of third-party “influencers” on various social media platforms. Rather than asking all the social sites, we took to our friends over at Forbes to help explain this new age marketing strategy and how it’s involved in recession-proof advertising efforts.
Forbes explains that influencer marketing is more than just a promotion or endorsement by a celebrity. It’s a relationship that’s created between an influencer and a brand. Influencers are well-known, trusted people that have a loyal following within their specific niche community. They also usually have experience with or knowledge of the products or services they’re promoting, such as a fitness vlogger advertising for a supplement or exercise equipment company.
These influencers work on their own and create content of their choosing. They will follow your ad specifications and requirements, but ultimately, they have control over:
- The message of the brand
- How they want to portray that brand
- Who their marketing reaches
This may not be the ideal avenue of marketing for every business, but it can be a great way to capitalize on trends and keep the budget tight when you’re trying to make the most of your ad spend during a recession or economic downturn.
Why Influencer Marketing?
The big question a lot of companies have is simple: why should we rely on these “Internet celebrities” to endorse and promote our products when we have cultivated “real” marketing opportunities like SEO, print and TV ads, and so forth?
In 2022, influencer marketing is real marketing, and it’s viral marketing at its finest. It allows for these influencers to use their social reach to promote products and services that they stand behind or enjoy. After all, an influencer isn’t going to promote a product they don’t necessarily like, and most likely use or have used.
Instead of consumers being skeptical of a traditional social media ad or even a radio spot, they’ll be getting trusted information from people they watch and engage with on a regular basis. Essentially, consumers love their influencers as role models. If influencers love a product or service, so will their audience. It is that simple, but also that complex.
In the new age of influencer marketing, understanding the important analytics in the social media space are extremely important so, you aren’t swindled by an influencer with fake followers or bots trying to scam companies for one reason or another.
The Timeline: Perfecting Your Marketing Execution
Throughout all of this, remembering that implementing any marketing strategy, even a lean one, takes time and effort. Therefore, businesses want to have a timeline included with a strategy that offers a loose timeline when chances will be seen, how results will be measured, how long to wait before measuring results.
As we’ve been discussing, it’s less about stopping the flow of money during a recession and more about being deliberate with where the ad spend efforts are going. Experts and agencies recommend that not only should businesses and brands not minimize ad spend, but rather consider maximizing it in as many ways as you can.
Amid this increasingly uncertain time, it gives the liberty to get creative and embrace tools like digital media. The caveat, though, is that being deliberate and thoughtful in every single campaign created is critical. Consumers who are living in these difficult times want to find brands they can trust and consistently come back to.
To recap, when creating a timeline for your advertising efforts during an economic downturn, start slowly to foster that foundation of trust and then find ways to maximize ad spend along the way. This is how you will be able to see the business grow in an economic downfall.
The Final Call: Do What Fits Your Business
Ultimately, in an economic downturn, it’s about understanding what your business needs in terms of marketing. Especially now, it’s critical to evaluate every single dollar you’re spending and make sure that it’s being spent wisely. Businesses and brands can never afford waste, but it’s even more important to eliminate now.
With this information provided, your brand or business can have a much better understanding of how to boost marketing efforts and become one of the few that maximize their advertising efforts and continue to see growth despite the recession.
Right now is the time for conscious, deliberate ad spending, making connections with potential consumers. Now, more than anything is the time for you to embrace all the tools available to take your business to the next level, regardless of what state the economy is said to be in.
How Can USIM Reach your Goals?
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When working with USIM to plan and activate, our team provides high-level direction on creative in addition to recommendations for each campaign.
For more information on how USIM can help optimize your marketing strategy, connect with your individual planning team to discuss next steps.