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At TechCrunch Disrupt 2022 in San Francisco, LinkedIn’s Vice President of Product Management, Gyanda Sachdeva, kicked off a session called All Weather Marketing: Making Good Decisions In Bad Times by asserting, “…the truth is that cutting back marketing spend in a downturn is a really bad idea.”
This bit of business wisdom may have seemed paradoxical to the leaders in the crowd: Most companies’ knee-jerk reaction is to cut marketing, but Sachdeva was advocating to increase it during some of the most turbulent times a company faces. However, historical data proves that companies that spend more on marketing during an economic downturn end up being the ones that grow — even post-recessions.
“There is over 100 years of research on this topic which shows companies that increased their marketing spend in a downturn are the ones that grew in the years following the recession,” Sachdeva reassured.
Here are three concepts that leaders — no matter what stage their businesses are in — should employ to market effectively during economic declines. Using a mix of marketing tactics, any company can strongly emerge from economic instability.
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Start a new company
Sachdeva cited a recent LinkedIn report which found that even during tough economic realities, the entrepreneurial spirit is alive and well. The report found that in the first 10 months of 2022, 274,000 new companies were created, 226,000 people became first-time founders, and 1.1 million workers joined these startups.
Startups’ employee base also quadrupled in the last three years during suboptimal economic times. While this seems counterintuitive, history substantiates these metrics. In fact, General Electric, IBM, HP, Salesforce, Microsoft, Airbnb, Uber, and Venmo were all started during economic downturns and grew into the behemoths we know them as today.
Why do bleak economic forecasts spur new brands? A study conducted by the Marketing Science Institute (MSI) explained that recessions concentrate buyers’ attention on fewer, high quality business launches. This is because the added uncertainty of such times tends to churn out a company’s best product: Capital is tight, which makes the margin for error ever smaller. This recipe has created some of the most recognizable brands in the world.
Rerun, refine and reinvigorate marketing activities
Existing brands have their own set of challenges, including how to view content creation during turbulent economic landscapes. As marketeers, we’re usually only as good as our latest new idea and how well we can execute it. However, recession marketing turns this on its head. Sachdeva suggests that this can be the best time to double down on previously successful creative assets. Coming up with new materials takes time, energy, and resources that may over-tax a company trying to stay afloat.
“Old creative doesn’t wear out; it wears in,” said Sachdeva. This also avoids companies running unproven creative concepts which may not succeed — thus wasting time and money.
Firmly rooting into the brand that consumers already know and love also reinforces a company’s existing organic presence. This is especially fitting when budgets are tight. Sachdeva mentioned reinvigorating existing fans by using “high attention formats” like newsletters, podcasts, and live video events. This will galvanize the community in bad times, which helps create a base for when times improve. This tactic lowers the effective cost-per-reach and makes marketing dollars go further.
Sell your future buyers
No matter the economic landscape, successful businesses always market to their future consumers. Any professional marketer experiences this on a daily basis. According to Ty Heath, LinkedIn’s Director of Market Engagement, 95% of B2B and B2C buyers aren’t ready to purchase products or services.
That means even during economic prosperity, companies are constantly selling to prospective customers. According to Sachdeva, this “95-5 Rule” becomes the “99-1 Rule” during downturns. The pool of future, ‘out market’ buyers rises 4% as more people delay purchase decisions. That’s why Sachdeva cautions leaders against focusing on the near-term during these times because short-term sales opportunities are always small.
Instead, the best strategy is drive marketing that continues to cater towards the increased pool of long-term growth opportunities. This ensures that instead of going into a marketing freeze, enterprises are focused on how people will know about brands when they are ready to make purchases. Which, as history shows, is best executed through sustained and future-facing marketing efforts.
Peter Weltman is a public relations and communications strategist and founder of Man of the World Media.
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