Listen to the Article Here
The short answer to the question, “Should I invest in marketing during a recession?” is a resounding, yes! In fact, it’s a must. Here’s what you need to know.
As of November 2022, it is highly likely we are in or will officially be in a recession.
Read these to get up to speed:
- “‘Uncertain’ economic outlook includes negative growth in 2023; recession not ruled out” – Indiana University
- “Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.” – World Economic Outlook
- “IMF cuts global growth forecast for next year, warns ‘the worst is yet to come’” – CNBC
- “A Harder Landing for the U.S. Economy Now Looks More Likely” – Morningstar
- “We forecast that 2022 Real GDP growth will come in at 1.8 percent year-over-year and 2023 growth will slow to zero percent year-over-year.” – The Conference Board
- “The US economy is still running on a post-COVID sugar hight that’s about to run out and make 2023 feel miserable.” – Business Insider
Let’s assume you are not ignoring the signs of what is coming. How do you prepare?
We know that during a recession, there will be very few dollars chasing many goods and services. Think about that fact. That is why it is imperative for you, today, to maintain or even increase today’s money towards 2023 marketing and advertising. Your business has to fight for every dollar going into 2023 and probably through to 2024.
General Mills is a great example of a company that decided to go against the grain – pulling back and holding tight to cash reserves – and instead invested during recessions, and in the case of the last one, grew more than when the economy was in good health. “General Mills holds firm in face of a recession threat: ‘It’s not really a time to pull back.“ – Food Navigator USA
Your competitors are either going to pull-back or invest in marketing their business.
Chances are more that less of your competitors are going to succumb to fear and pull-back; they will enter into survival mode. A few, though, will understand there are many opportunities for growth and success during a recession.
The fact you are reading this is a positive sign for your business’s success. The next step is to decide and commit to allocate a healthy amount of dollars to your 2023 marketing and advertising budget.
The goal is not to lavishly spend on all sorts of marketing and advertising, but to strategically invest in effective and efficient marketing. Marketing and advertising alone, though, may not be enough.
Beginning this week, or at least this month, begin looking at your portfolio of products and services, and evaluate where and how you can offer deals, real or perceived. Can you package individual products or services for a discount? Can you discount one low-profit item when paired with a high-profit item?
For example, let’s say you sell Widget XL and your profit on it is $50, while Widget LP is a $10 profit item – notice we are not concerned about percentages, but rather real profit dollars. What if you discounted Widget LP by $5 if purchased with Widget XL? Your profit would be $55, vs selling only the Widget XL.
What if on a high-volume sales week, you wanted to increase the sales of Widget XLs by 1 extra unit? Maybe run another promotion discounting the Widget LP by $10. If you normally sell 10 Widget XLs ($500 profit) and now increased it by one more with the Widget LP discount, you increased your profit to $550.
What if discounting Widget LP by $20 if paired with a Widget XL increase Widget XL sales by 3 in the week? Even with a $10 loss on the Widget LP, your net profit would be, assuming a volume of 10 Widget XLs is the baseline, $640!
It’s not about only social media, SEO, digital ads and legacy ads
“Marketing and advertising” in a recession has to include business efficiencies, as well as thoughtful and strategic promotions, coupled with strategic and effective marketing and advertising.
Now is not the time to plan for a pull-back. Now is the time to plan for strategic boldness. Plan to invest for growth in 2023.
Get your team together and put on your brainstorming hats. It is time to finalize your 2023 plans!
If you need help, our team at Digital Marketing Partner can, and would be happy, to help you plan for 2023 covering any or every aspect of what this article discussed.
Wishing you a strong close to 2022 and a robust 2023 regardless of the expected economic downturn.