According to experts, a recession may be on the horizon. Individuals can't stop it, but businesses can—and must—prepare their marketing efforts to thrive in the face of fluctuating budgets.
Though it hurts in the long term, advertising spend is often the first casualty of a recession when brands start making cuts. Even when budgets are growing, many companies tend to underspend on marketing.
Whether boom or bust, many marketing teams prefer to maintain the status quo rather than making a comprehensive, thoughtful evaluation of the best capital allocation opportunities. In a recession, however, successful budgets rarely stay that flat. No matter the economy, channels wax and wane in effectiveness from year to year, especially when compared to the increasingly varied options on the market. Even offline channels today deliver fast feedback and data, providing executives with more to do and less money to do it.
A recession demands an even more fluid budget with regular iterations contingent on what opportunities are available. Managing a budget properly requires having a dedicated team who can flex budgets when needed, making adjustments for both short-term issues and long-term downturns. Limiting financial talks to the start of the year prevents businesses from responding to conditions on the ground. Staying fluid and flexible allows room to pursue lucrative opportunities while squeezing the most value out of each dollar.
Fluid Marketing Budgets in Action
Unique opportunities arise during times of instability and uncertainty. When major brands were forced to drastically cut marketing budgets during the Great Recession, those that figured out how to manage a budget flexibly weathered the storm more easily. In many cases, maintaining a fluid marketing budget allowed brands to divert funding from bull-time pursuits to offset revenue loss and retain adequate working capital. For some, managing the budget meant slashing spending on traditional media to take a more cost-effective route. Instead of television ads, for example, companies could leverage brand power and celebrity endorsements to create material for the then-novel venues of social media and YouTube.
Fluid marketing budgets allow companies to redirect marketing to products that do well in recessions and to target channels that suddenly offer new opportunities. YouTube and Facebook—far from the uncharted waters they represented in 2009—may now be the places to cut back. Lean times may see the crowds dwindle on popular channels like Facebook; organizations with structures and budgets built to adjust can swarm to those market inefficiencies before others recognize the potential.
Smaller brands often see results even more immediately. At my company WellPath, we stay flexible by putting aside some amount of capital for opportunistic marketing every month. That is, instead of allocating every dollar to specific channels, we have funds available to either experiment with something new or double down on whatever strategy is performing the best at that moment.
Adjusting Business Funding on the Fly
During and after a recession, business owners will need to stay nimble, changing courses when funding for one channel gets cut and exploring newer, more cost-effective ones. That allows for steady advertising volume and impact even amid belt-tightening.
No matter the economy, channels wax and wane in effectiveness from year to year, especially when compared to the increasingly varied options on the market.
Loyal customers, important during times of plenty, become vital during slow periods; marketing to these customers is an essential component of an effective recession strategy. As customer acquisition costs climb in recessions, executives must be able to manage their budgets to focus on the people who already love their brands.
None of this should imply that business owners don't know what's coming. Leaders are always paying attention to the economic climate and considering what it means for their businesses. Right now, the savviest executives across every industry are adjusting their processes to prioritize adaptability and iterative potential.
Though financing speculative campaigns may feel too risky, now is the time to try new things, explore new channels and collect new data. When a recession arrives, companies that can adjust their strategies to focus on the most effective tactics will thrive.
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