don't cut your marketing budget in a recession

Why It’s Dangerous to Cut Your Marketing Budget in an Economic Downturn

With talks of a potential impending recession swirling in the air, you may be contemplating in advance how you could reduce your spending if the economy continues its current trajectory.  When considering this question, some business leaders look first at marketing or advertising budgets.

Why?  Advertising and marketing costs may drive new business, but some businesses can go for a short period of time on existing business only.  It’s a short-term strategy.

Nevertheless, research suggests that cutting marketing budgets during economic downturns is not a good idea – for your revenue or the future of your company.  In fact, companies that do not cut their marketing spend during a recession are more likely to achieve better business performance than those that do.  And companies that are proactive in their marketing efforts during a recession – and often those who increase their marketing spend – fare better both during and after the recession.

However, you may wish to reconsider your marketing spend strategy.  Should you continue to spend your marketing budget on the same tactics you’ve been using?

Successful marketing during a recession often involves an adjustment in both strategic messaging and media planning to improve results.  Here are a few things to consider.

Best Practices for Marketing in a Recession

The companies that take a proactive approach to marketing during an economic downturn often view their marketing as an investment, not an expense.  This perspective is critical to making wise decisions.

Marketing is about meeting your customers and prospects where they are and providing them with what they need in that moment.  People’s needs, priorities and spending habits often shift during an economic downturn, so the context in which they are operating must be front of mind when identifying best marketing opportunities.  Consider the following categories of marketing expenses.


Advertising spend is often one of the first things slashed during a recession.  Because many companies stop advertising during an economic downturn, advertising slots may become less expensive due to decreased demand.

For example, ad spending after the 2008 recession dropped by nearly 13% in the U.S., with the biggest declines seen in newspaper and radio ads.

At the same time, advertising channels become less competitive because there are fewer voices in the mix.  This creates an opportunity to differentiate yourself from the pack by earning a larger share of the market while keeping your advertising budget the same.

Brand Messaging

A downward economic shift also provides an opportunity to show solidarity with your customers by conveying to them you’re always there to help – regardless of the circumstances.  This is a good time to build trust and strengthen your brand with an emotional and pragmatic approach that resonates with what your audiences are going through.  You may potentially even want to reconsider your value proposition.

By demonstrating to new customers that you’re willing to be what they need when they need it, you’re also more likely to keep them – along with your current customers – when the economy improves.  It is a great brand loyalty opportunity you do not want to miss.

Customer Communication

Existing customers make up about 65% of a company’s revenue.  While bringing in new customers is important for business, maintaining the loyalty of the ones you already have is arguably paramount.

It’s typically easier, cheaper and more effective to market to existing customers versus focusing solely on prospects.  For this reason, marketing to current customers isn’t optional for businesses that want to survive a recession – it’s often essential.

One of the best ways to reduce the risk to your business is to maintain a strong, relevant and memorable brand that people feel they can rely on in times of crisis.  Understanding your customers’ current pain points, empathizing and providing them with a solution is an opportunity to strengthen their loyalty during and beyond a recession.

How to Create an Effective Marketing Strategy

Marketing during an economic downturn can catapult your sales and brand awareness, but you need a well-thought-out strategy for it to be effective.  As you develop a marketing plan in case of a recession, consider using the below steps as a guide.

  1. Start by tracking how your customers may be reallocating their budgets and redefining what they find valuable.  This in-depth understanding of your audience can be obtained through qualitative research to help identify new opportunity gaps.
  2. Revisit or create/update your messaging strategy to ensure it aligns with current market research and feedback from key stakeholders.
  3. Define the most relevant calls to action to deliver measurable brand connections and appeal.
  4. Execute and carefully monitor your new marketing strategy so each piece can be adjusted based on performance.  Establish new key performance indicators (KPIs) so you have something to measure your success against.

TruStar Marketing specializes in building memorable brands while simultaneously driving new business, measurably.  Contact us today for an informal conversation about your challenges.  We love to share our experience.