Position Your Business to Take Center Stage Online During an Economic Decline
The challenges we face today were inconceivable prior to this global crisis. Entire industries are bracing for a future that is difficult to predict, with millions suddenly unemployed, albeit temporarily. As the U.S. and global economy are in a Corona Virus-induced recession, you may feel inclined to cut your advertising spend. However, this is the precise time to increase the marketing budget for your business.
The U.S. has seen 47 recessions since the mid 19th century. Most companies tend to make cuts in marketing and advertising before reducing expenditures in other areas during a downturn. Following the last economic decline in 2008, spending fell by 13% in the U.S. Conversely, numerous studies have proven over the course of a century that companies that chose to stay the course or increase their advertising dollars also experienced:
• Increases in sales
• Increased market exposure
• Increased share of the market – during the recession and following it.
One study during the 1980-1985 U.S. recession proved this to be true yet again. McGraw Hill analyzed the marketing strategies of 600 companies during this period. Those companies that continued to advertise both online and in traditional channels experienced 256% growth on average compared to their competitors that decreased or cut their marketing & advertising spend entirely. Also, during the 1990 downturn, Pizza Hut grew sales by 61%, and Taco Bell’s sales increased by 40% while McDonald’s cut its advertising and experienced a sales decline of almost 30%, confirming that this was no coincidence. In fact, companies that continued to advertise during a recession not only were rewarded with increased sales and net income during that period, but their efforts continued to pay off for two years that followed as well. The companies that made cuts to advertising and marketing budgets not only saw declines in sales and income, but they found that retention efforts afterward were up to five times more costly in comparison to what the cuts saved them. A precious lesson, indeed.
Here are some more reasons to continue or even increase marketing and advertising during an economic downturn:
• Google PPC and Facebook spend is down. Fewer companies advertising and bidding for these positions means media is now less expensive to sell available ad inventory. TV, radio, online publishers, etc. still have quotas to make. This opportunity can enable a company with this knowledge to gain a foothold in a market, overhaul its brand, or even introduce a new product or service at minimal cost to market it. The potential for increased market exposure here is invaluable.
• During a period of economic growth, big companies have larger budgets and can afford to be less selective about where and how they spend their money. This approach makes it tougher for smaller companies to compete as the cost to advertise goes up. However, as more prominent brands cut spending, an opportunity opens up for smaller businesses to gain prominence and build a whole new customer base by the time the economy recovers. This customer base will be harder for competitors to win back once the smoke has cleared.
• Advertising and marketing during an economic decline project a message of leadership, stability, and confidence to consumers. People remember leaders in government that provide a strong voice during these times, and they will also not forget the brands that were a mainstay as well. They will forget about the companies that weren’t at the forefront. This is a good time for promotional offers and consistent messaging that conveys sincerity, reassurance, and strength.
• It’s easy to cut back advertising during a recession to make up some of the lost income. However, this move comes with the inevitable risk that you will be opening the door for competitors to step in and build relationships with your customers while they are already vulnerable. It also allows your competitors to increase their exposure without the threat of competition vying for the same consumer attention.
Now is the time to find a way to stay relevant and engaged with your audience during these challenging economic times. Now, more than ever, with millions of consumers working remotely, shopping online, and using digital channels almost exclusively to communicate, new opportunities exist to engage with customers and communicate with them on a more demonstrative level. The companies that adapt to the shifting market environment will be the ones that will ultimately endure and prosper.
There is no reason to panic. Instead, use the data available to your advantage. Become more responsive and plan for this shift. Business owners and marketers can do this by modifying their ad messages and considering short-term price incentives that show how supportive and understanding they are of their customers’ needs during these tough times. Examples of adaptation to this shift can be found right now with auto manufacturers. There are several of them offering car buyers no payments for three and six months. Other companies are transitioning from their regular production to producing hand sanitizer. Many restaurants are offering safer at-home delivery and take out. Supermarkets are setting time frames specifically for seniors to shop so they can be safer when they need to purchase essentials. While consumers will cut back on spending temporarily, life still moves forward. Auto leases will still mature, and purchases are still necessary. Both consumers and brands are adapting to a new normal as demand for products and services shift.
Now may also be the time to consider enlisting a marketing agency that specializes in building local search prominence and can help business owners uncover new pathways to consumers that will grow market share. This strategy is one that will pay off during these challenging times and long afterward.
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