How to Invest in Marketing During an Economic Downturn
As you’re finalizing your 2021 marketing plan, you might be battling with feelings of uncertainty. 2020 certainly didn’t go as planned, and no one is 100% sure how the next 12 months will look. It’s difficult to plan your 2021 marketing budget in normal times, let alone this year.
No one is certain if the economy will make a quick comeback, or if it’ll take a downward dive for the foreseeable future.
Today we’ll help you decide how to invest in your marketing efforts if the market takes a turn for the worse in 2021. Of course, you can also use these marketing tips when the economy is doing great, but we’ve found that making investments in your business is more difficult when there is uncertainty of the future and the economy is unstable.
Keep your marketing consistent in turbulent times
Your audience is paying attention to the content you’re putting out, and the tonality of your messaging. Your customers need to see confidence from you. If there’s uncertainty in your marketing, the chances of them wanting to buy from you decrease.
Potential customers want to see that your company is healthy. If a car company announced that they were planning to go out of business in 2022, no one would be buying a car from them. One part of that is your marketing consistency. If customers don’t hear from you, it sends the message that you’re unavailable to help them.
Being consistent with your marketing efforts displays the health of your company and employees and lets consumers know you’re still available to them. If you show your customers that you’re active, present, and understand their needs, you will be prepared to weather any storm. Even if you’re facing a budget cut, don’t stop putting your message out there. Keep posting on social media, continue your email marketing, and keep writing blog posts. Those are investments you’re making for future growth.
How did marketing budgets change in 2020?
After the 2008 economic recession, many companies realized that the downturn was actually an opportunity for growth. Of course, not everyone won, but many businesses were created and found ways to thrive despite the downturn.
Uber, Venmo, Groupon, Slack, and WhatsApp were all started in 2008-2009. They saw the downturn as an opportunity for innovation and growth.
So, how did 2020 affect marketing budgets?
Overall, there’s a mixed bag of results: Some budgets increased, others decreased, and some stayed the same. In June 2020, Merkle surveyed 400 US and UK marketers. The survey revealed that over 70% of marketers either increased their budget or kept it the same amid the pandemic.
On average, the marketing budgets increased for many industries. Non-profits were the only industry where marketing budgets were decreased more than increased (17% increased, 70% decreased).
The clearer message that the survey shows is that the majority of marketers were shifting their marketing efforts. They weren’t spending more money doing more of the same things. Instead, companies were investing money to pivot and innovate their marketing plans and efforts.
88% of marketers said that communicating with customers has become more important in 2020, and they’re finding new ways to create connections. This is done by exploring new marketing technology and communicating with your customers in a new way.
With more people are staying at home, they are less likely to come to you. So you need to get your message to them. Whether that’s on social media, a live chat on your site, paid ads, or email marketing. In 2021 and beyond, it’s essential to find and reach your customers where they are.
Understanding your customer’s behavior
It’s guaranteed that your customers have different behaviors than they did in 2019. If you want your 2021 marketing plans to succeed, you need to understand their new habits and behaviors.
Usually, during difficult times, many brands need to reduce their marketing spend. This can cause the noise level in a product category to drop. Less noise also allows you to reposition your brand to meet your customer’s new desires. If coffee shops decrease their marketing budget, it gives your coffee shop a chance to stand out and be heard.
You can ask yourself and your team a few questions to identify new habits or priorities:
What is now more important to our customers?
What is now less important to them?
Are certain products or services becoming more or less popular?
Are products or services being delivered in a different way?
What are people spending more and less time doing?
In addition to asking your team, you can send out a quick survey to your previous customers. Your return customers are the most reliable source of income, and most people are willing to share their opinion, especially if they get a coupon in return.
When you’re making a shift in your marketing, it’s essential to keep track of results. Great marketing campaigns are designed to be monitored. With SMART goals and quantifiable results, businesses can utilize this information to ensure their adjustments are working.
Has consumer confidence dropped?
As you can see here, there wasn’t a significant drop in consumer confidence. If you zoom in, there’s a 15-20 point drop in March 2020, but consumer confidence quickly rebounded. Investopedia defines the CCI as a measurement of how optimistic or pessimistic consumers are regarding their expected financial situation.
The CCI is based on the belief that when consumers are optimistic, they spend more and stimulate the economy. And if they’re pessimistic, their reduced spending patterns could lead to a recession. Based on the current numbers, people haven’t lost their confidence, and they will likely continue to spend money.
We saw this recently when Amazon had a record-breaking Black Friday/Cyber Monday sale. Apple also had a record-breaking New Year’s Day of 2021, making an additional $540 million—a new single-day record. This is good news for you because you can be confident that your customers are still willing to spend money on products and services they see as valuable, despite the economy’s uncertainty.
Marketing expenses vs investments
It’s essential to view your marketing as an investment during a downturn rather than an expense that needs to be reduced.
When marketers cut back on their ad spending, they might save some money in the short term, but they often end up hurting their brand. When you cut your marketing spending, your brand loses its share of mind with consumers. When people see your brand less and less, it comes with the potential of losing current and possibly future sales.
An increase in marketing spend leads to a rise in the share of the market. And an increase in market share increases profits. Based upon the past economic downturns, your marketing department can take advantage of this time to improve and move forward.
Business expenses are focused on an immediate trade. But you invest for long-term business growth. Like any investment, investing in your marketing won’t skyrocket your sales overnight, and you won’t have the immediate satisfaction of trading X for Y. The most successful investments are aimed towards long-term, sustainable growth.
Successful companies never stop marketing because they look at marketing as an investment, not a line item expense that can be cut to save money.
If you need help determining how much you should invest in your 2021 marketing plan, use our free Marketing Budget Calculator.