Boosting marketing may be the key to weathering economic downturns

During TechCrunch Disrupt 2022 in San Francisco, Gyanda Sachdeva, LinkedIn’s Vice President of Product Management, kicked off a session called All Weather Marketing: Making Good Decisions in Bad Times by claiming, “…the truth is that cutting marketing spending in a recession is a very bad idea.”

This piece of business wisdom may have seemed paradoxical to the leaders in the crowd: The knee-jerk reaction of most companies is to cut back on marketing, but Sachdeva advocated raising 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 are ultimately the ones that grow – even after a downturn.

“There’s over 100 years of research on this topic showing that companies that increased their marketing spend during a recession were the ones that grew in the post-recession years,” Sachdeva assured.

Here are three concepts leaders—no matter what stage their company is in—should use to market effectively during economic downturns. By using a mix of marketing tactics, any company can emerge strong from economic instability.

Start a new business

Sachdeva cited a recent LinkedIn report that showed that even during the 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 employees joined these startups.

Startup workforces have also quadrupled in the past three years during sub-optimal economic times. While this may seem counterintuitive, history backs up these statistics. In fact, General Electric, IBM, HP, Salesforce, Microsoft, Airbnb, Uber, and Venmo all started during economic downturns and grew into the giants we know them today.

Why are gloomy economic forecasts encouraging new brands? A survey conducted by the Marketing Scientific Institute (MSI) explained that recessions focus buyers’ attention on fewer, high-quality corporate launches. This is because the added uncertainty of such times tends to produce a company’s best product: capital is tight, reducing the margin of error. This recipe has created some of the most recognizable brands in the world.

Re-executing, refining and revitalizing marketing activities

Existing brands have their own challenges, including viewing content creation during turbulent economic landscapes. As marketers, we are 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 now may be the best time to double down on previously successful creative resources. Inventing new materials takes time, energy and resources that can put too much strain on a company trying to stay afloat.

“Old creative does not wear out; it wears in,” Sachdeva said. This also prevents companies from using unproven creative concepts that may not succeed – thus wasting time and money.

Rooting firmly in the brand consumers already know and love also strengthens a company’s existing organic presence. This is especially appropriate when budgets are tight. Sachdeva mentioned reviving existing fans by using “high attention formats” such as newsletters, podcasts and live video events. This will invigorate the community during bad times, helping to create a foundation for when times improve. This tactic lowers the effective cost per reach and keeps marketing dollars going further.

Sell ​​your future buyers

Regardless of the economic landscape, successful companies always sell to their future consumers. Every professional marketer experiences this daily. According to Ty Heath, Director of Market Engagement at LinkedIn, 95% of B2B and B2C buyers are not yet ready to purchase products or services.

That means that even during economic booms, companies are constantly selling to potential customers. According to Sachdeva, this “95-5 rule” becomes the “99-1 rule” during recessions. The pool of prospective, out-market buyers is growing by 4% as more people delay purchasing decisions. Therefore, Sachdeva warns leaders not to focus on the short term during these times, as short term sales opportunities are always slim.

Instead, the best strategy is drive marketing that continues to capitalize on the larger pool of long-term growth opportunities. This ensures that instead of going into a marketing freeze, companies are focused on how people will know about brands when they are ready to make a purchase. Which, as history shows, is best accomplished through sustained and forward-looking marketing efforts.

Peter Weltman is a public relations and communications strategist and founder of Man of the World Media.