Updated January 10, 2023Reading Time: 6 minutes
According to Newton, what goes up, must come down. With over 10 years of steady economic growth behind us — following The Great Recession — many economists share their predictions of what lies ahead… namely a slowdown in economic growth. With the lowest unemployment rates in history coupled with strong consumer spending, businesses have invested in marketing. Recently, due to international uncertainty and political instability, the economy has wobbled. So it’s time to remind ourselves about following economic trends and more closely managing our marketing budgets. Because who knows what’s around the corner.
Since the economic expansion have spanned a decade, many marketers won’t remember what it was like to market in a downturn. Young marketers were still in college during the subprime mortgage crisis. But for those who do remember, we’re alert to the warning signs and want to plan accordingly.
Winter is Coming
If you want to succeed in business, whatever discipline you work in, having some knowledge of the economy and what’s going on in the wider world is important. You might say “I don’t care about politics or economic policy” However, those factors may actually affect your industry or employer and thus your job.
Part of marketing’s recent revolution has been caring about ROI. Understanding the concept of return on investment is integral if you, as a marketer, want to contribute to the business. Understanding the economic climate in which your business is living is an extension to that.
For example, if you’re given a specific goal to achieve, you need to be able to put that target into context. For example, your CEO wants you to double the number of inbound leads to a business-travel business. Can you say with confidence it’s achievable? If you know that there’s been a huge increase in unemployment figures countrywide, with layoffs at large corporate employers, then you should push back on this target. Or at least express your reservations upfront.
Where Do You Find Your News?
Generally we like to look at several specific markers to see how the economy is performing:
- Consumer confidence index (CCI) – You can track the CCI in various different places. You will also often see it quoted in other articles or news pieces all over the web.
- Job Growth – When we’re looking for job growth data you can get a bunch of different figures. These numbers are often politicized. So be careful where you get your information. We suggest official sites like the Bureau of Labor Statistics. The presentation may be boring but the data is unbiased.
- GDP – Gross Domestic Product has long been used to measure a country’s economic health. Again, there are lots of websites that will list GDP figures for the US (and you’ll see it quoted in many articles). We recommend gathering data from the source, such as the U.S. Bureau of Economic Analysis (BEA).
We’re not claiming to reinvent the wheel here. All of the measures above are economic indicators. The only thing we’re doing is looking at each of them from a marketers perspective.
One other place that we look for news linking marketing to the ‘big picture’ is the CMO Survey. This free, bi-annual, survey is published by Deloitte and run by Sr. Professor of Business Administration, Christine Moorman, at Duke University. The CMO Survey aims to “predict the future of markets, track marketing excellence, and improve the value of marketing in firms and in society.”
By reviewing the above metrics, you’ll have a snapshot of what’s happening in the overall economy. Also review industry-specific sources — like associations or trade groups — to gather intel on trends that affect your employer/business. It’s likely that you’ll see some correlation between the two.
If you’re collecting this information for yourself, you’re starting to think like a (good) CEO. You’ll also have some insight into the future. Nobody can predict exactly what’s around the corner. But you’ll have more foresight into the next months, and barring any major surprises, the year ahead.
There will come a time when you look into your crystal ball and see that times are going to be hard. If you think that an economic blip, or even worse, a recession, is on the way, you need to act accordingly.
Does your CEO or CFO think of marketing as an optional expense? Often marketing budgets are the first to be hit by budget cuts. Yet as an ROI-focused, economically aware marketer, you should be armed with data that resonates with your C-Suite. If you need help in proving ROI, check out our tips about attribution, tracking, and showing marketing’s impact.
Dropping Bad Habits
The first thing to address is your customers. How customers behave during a period of economic growth or stability, is different to how they react in a slump or recession. Buying behavior can differ drastically from industry to industry. And the changes are not always logical. For example, you might think that luxury brands like Hermes would suffer in times of economic turbulence. But that doesn’t seem to be the case according to this Forbes’ article back in 2014 when the U.S. was still pulling out of the Great Recession.
How various demographic groups respond to economic downturns vary. There’s no universal, catch-all answer for what your customers might do. Look back on your company’s historical data to help predict future behaviors. That way you have the information you need to defend your marketing budget.
But, some budget cuts are unavoidable. It’s important to know what’s expendable and where you should dig your feet in. For example, here are marketing elements we think are essential to regardless of economic conditions: consider in uncertain times.
- Don’t stop advertising – Brands that cut advertising during an economic slow down put themselves at risk. Less visibility and potential customers with less money to spend is a recipe for disaster. It has been shown that brands that increase advertising during a recession increase their market share. So if you can, consider pushing for a higher advertising budget. If that’s not possible, then focus your advertising efforts on what’s working well. Double down on the channels/ ads that are working well for you and continue testing find additional lead sources.
- Pick which products to focus on – As we’ve said above, your customers behavior is likely to change. A great source of customer intel is your sales or customer service teams. They can alert you to the reasons why your lead products aren’t flying off the shelves. Also, don’t expect your marketing story to stay the same either. Now’s the time to reinvent the sales conversation.
- Ditch the crazy antics – When times are hard, stick to what you know. Brands that are sensitive to their audience’s situation — more cautious in their buying decisions — have traditionally performed better in times of instability. Adjust your marketing materials and advertising to fit the times you’re in.
When to Tighten the Belt
All the negotiating in the world won’t be able to save some reductions to your marketing budget. Here are some simple ways to save some money:
- Sort your campaigns by ROI – Yes, we’re banging the ROI drum again. If you can work out ROI for all of your different marketing campaigns and channels, it should be easy to work out which you can cut. We’re big fans of testing everything. However, we admit that testing plans need to be scaled back when times are hard. Focus on what’s working while reserving some funds to test alternatives.
- Automate where you can – If you’re working on a tighter budget, that may mean staff reductions and your time is stretched thin. Make sure you’re using technology to pick up the slack by automating simple things. For example, if you’re manually sending followup email to sales leads when they fill a form on your site, it’s time to automate it. Take the time to sit down and craft a suitable message. Then, use a tool like MailChimp to program those emails to respond to new leads. Taking one or two hours to automate simple tasks like this will save you a lot of time in the long run. That time can be better used on higher-level and higher-return tasks.
- Outsource – Outsourcing isn’t always cheap. Often you’ll find you get what you pay for. But outsourcing can be a good option when compared to hiring a full-time employee. We’re obviously outsourcing fans because we’re an agency… but there are plenty of reasons why outsourcing can a good alternative when marketing budgets are stretched. Our retainers are flexible, where you can expand marketing support where you most need it.
The End is Nigh?
Will we, or won’t we enter a recession soon? Nobody is sure. But what is sure… the economy can’t expand forever. Marketers should prepare by focusing on their ROI and recognizing the bigger picture. Stay aware of market metrics. Test for new opportunities. All the while, honing their messaging internally so their marketing efforts are given the credit it deserves. That way, if bad times do come, you’ll be ready.
Photo credit – Top: Mark Jensen
Photo credit – Bottom: Nogran SRO