Should Small Businesses Advertise During an Economic Downturn?
The global economy has come grinding to a halt in the wake of the COVID-19 coronavirus. With the market crash, widespread quarantines, government-mandated business closures, and social distancing, all signs seem to point to a recession. We all know some people and businesses are struggling. We also know that many businesses will endure and need to plan for what happens after this crisis passes.
For businesses, advertising dollars are often the first to go during a recession. It seems like the logical choice — consumers are spending less, so why continue to pour money into advertising?
However, advertising your brand during a recession can pay off. A study conducted by McGraw-Hill looked at the advertising spending of 600 companies during the 1981-1982 recession; they found that, by 1985, the companies that continued to advertise experienced up to 256% more total growth than their competition.
To survive and thrive in a down economy, maintaining or increasing your advertising efforts will be of great help. Not only will there be less competition — as other brands will operate on the “consumers are spending less” line of reasoning — but you also position your business better for the long-term.
Do Not Cut Your Marketing Budget: Continue to Advertise
Cutting advertising spending is tempting for smaller businesses with a limited budget. What they are doing, though, is creating room in the market for your brand.
Perhaps you run a hardware store. Whether the economy’s booming or receding, people are going to need tools and materials to fix things up around the house. As other hardware stores cut their advertising budgets, you can get more business by upping your own.
So although decreasing your advertising budget might save a few bucks in the short-term, maintaining your marketing efforts and even getting more aggressive can help you acquire more business and increase profits.
It's Cheaper to Advertise right now
Ad inventory needs to be sold regardless of the economy. It’s simple supply and demand: as businesses slow down on advertising, ad space will become cheaper. Now is your chance to gain better ad placement without paying an exorbitant amount for it.
An Opportunity to Strengthen Your Long-Term Position
The benefits continue — and even increase — long after the recession ends. As the economy begins to improve, consumers will spend more. An analysis published in the American Business Press found that companies that had sustained or bolstered advertising spending during the 1991 recession experienced 25% more five-year sales growth than their competition.
Assuming you maintained your advertising campaigns through the recession, you should have many new loyal customers, most of whom now have more money to spend. Consequently, you could see healthy increases in sales for years to come.
Recession Marketing Tips
Track Everything Diligently
In a recession, you want to maximize the power of every advertising dollar. Tracking and analyzing the results of your campaigns provides you with quantifiable data — useful for identifying what’s working and what’s not.
From there, you must continually tweak your strategies to increase your sales. You can’t force customers to buy from you, but by regularly refining your messaging based on data, you can push more of them towards buying from you.
Tap Into Emotions and Tailor Your Message
Connecting with a consumer’s emotions is powerful — even more so during a recession, a time when consumers are worried. In your advertising campaigns, tap into the emotions your audience may be feeling, such as fear, stress, and uncertainty.
Don’t be afraid to address the poor economy in your advertising. Connect with customers by acknowledging their emotions, and then demonstrate how they can save money by buying from you — whether that is because your products are inexpensive or that they can save your customers money in the long run.
Focus on Your Current Customers
Although you can more easily gain new customers in a recession through advertising, don’t forget about your existing ones.
Stay in regular contact with them, work hard to please them with excellent service, and reward their loyalty with discounts or gifts. They’ll continue to stick with your brand, but they’ll advertise for you via word-of-mouth for free.
If you are trying to figure out how to recover from this downturn, we are happy to talk with you to see if we can offer some effective ways to get you in front of affluent consumers. Call us (301) 328-1511 or visit our website. We have some great promotions and incentives for business owners who want to position themselves for success regardless of economic fluctuations.