We all know it’s best to buy low and sell high. But, so often, that very simple edict gets rationalized and turned upside down. People tend to buy when markets roar, then sell when they tank.
The same could be said about marketing, advertising, and sales. When the economy takes a downturn, so does the spending aimed at convincing customers to choose your product over a competitor’s. In other words, when the economy gets shaky, the gut reaction for most brands is to slash the ad budget. It’s emotional. It’s understandable. It’s also one of the fastest ways to fall behind.
History proves it: Brands that increase or maintain advertising during downturns don’t just survive, they often come out dominating. Why? Let’s break it down:
1. Less Noise = More Market Share
While your competitors are going quiet, you’re getting louder for cheaper.
When the economy slows and competitors pull back, it’s time to move. Research shows that brands that maintain visibility gain a larger share of voice, while doing so at a lower cost. A McGraw-Hill Research study of 600 businesses during the 1981 – 82 recession found that those who maintained or increased their ad spend saw sales rise 256%, when compared to those who cut back.
2. It’s Cheaper to Capture Attention
Now’s the time to buy attention at a discount.
Ad inventory prices often drop during a recession. Less competition means you can buy more impressions for the same spend, or the same impressions for a lot less. During the 2008 financial crisis, many brands that maintained or increased media budgets reported stronger ROI post-recession. In some cases, TV ad costs dropped 15-30% during recessions.
3. Consumer Loyalty is Up for Grabs
This is your moment to move in and earn long-term customers.
People rethink their brand loyalties during tough times. They switch products, change habits, and become open to new solutions. Brands that connect emotionally through empathy and value now often earn loyalty that extends well beyond the recession.
4. The Long-Term Payoff is Massive
Companies that invest in marketing during recessions see significantly better long-term profitability.
A Bain & Company study showed companies that stayed aggressive during the 2008 financial crisis grew 17% faster post-recession than those that pulled back. Another study found that brands that cut spending took 5 years or longer to recover lost ground.
Similar patterns emerged after the 1990 and 2008 downturns – companies that stayed active came out stronger, recovered faster, and became more profitable.
The Bottom Line
Like most smart decisions in business, it’s best to be strategic. Throwing a ton of money at advertising during a downturn isn’t the wisest decision if your ability to deliver is already compromised by the very same conditions.
Despite the challenges, economic downturns aren’t just survival games. They can also present significant opportunities for innovation and growth.
References
- https://www.linkedin.com/pulse/why-smart-brands-increase-advertising-during-recession-peter-field/
- https://inksights.rep-ink.com/2020/04/how-much-should-you-spend-on-marketing-during-a-recession-heres-what-the-research-says/#:~:text=Perhaps%20the%20most%2Dcited%20research,did%20not%20continue%20to%20market.
- https://hbr.org/2009/04/how-to-market-in-a-downturn-2
- https://www.forbes.com/councils/forbescoachescouncil/2023/09/05/seven-reasons-cutting-your-marketing-budget-in-a-recession-is-a-mistake/
- https://www.bain.com/insights/beyond-the-downturn-recession-strategies-to-take-the-lead/
- https://www.marketingweek.com/does-advertising-really-help-during-a-recession/
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