The downturn we’re currently facing in the UK means many manufacturers are reconsidering their budgets for the next fiscal year – and, as part of this, debating a cut to their marketing budget.
Although the UK is not in a recession yet, there are strong indications we could enter an official recession at the start of 2023.
Marketing is key to a recession proof business – so here is how you should budget for it…
Should You Market in a Recession?
It is unfortunately common practise for B2B industries to completely cut their marketing budgets in hard financial times. However, it is important to continue your marketing efforts in a recession.
“Businesses that increased marketing spend as a proportion of market size reported higher market share growth in the first two years of recovery than those cutting or maintaining budgets.
This finding was recently confirmed in a review of cases from the IPA Effectiveness Databank involving the 2008-9 recession. The analysis, by marketing consultant Peter Field for LinkedIn’s B2B Institute, investigated the performance of businesses that invested during recession in Extra Share of Voice (ESOV) - namely, having a share of category advertising spend greater than their market share. It found that businesses with high ESOV reported future market share growth several times larger than those with small or no ESOV.”
Janet Hull OBE
Director of Marketing Strategy, IPA
Whilst it is important to continue your marketing efforts, you may need to refresh your marketing strategy in consideration of the changing economic environment. How you approach your marketing, and how much you spend, will depend on the strength of market. For example, if the primary market you’re selling into is closed for business, there is little point marketing products and services that are not needed.
By having a flexible marketing strategy which allows you to market in consideration of wider social and economic factors, you will continue to develop your brand saliency, enabling you to maintain, and even increase, activity in the recession. For instance, if your competition decides to reduce their marketing budgets, you will be able to capitalise on their corner of the market; this often leads to cheaper and more accessible advertising space, so you can increase your coverage for less spend.
And, as shown above, marketing through a recession also means your business may benefit from a quicker recovery rate following the recession – protecting you not only for the present, but for the future, too.
Budgeting for Marketing in a Recession
So, how should you budget for marketing in preparation of a recession?
It is clear businesses should continue their marketing efforts in some form during a recession, but this must be done in consideration of the financial state of your business and the wider economy.
Don't Cut Your Marketing Budget Just Yet
The first port of call is to state: don’t jump to cut your marketing budget in preparation of a recession. As previously explained, continuing to market strategically through a recession is key, and by cutting your marketing budget you risk losing momentum gathered by your current efforts. Your competition will capitalise on this opportunity.
If you need to reconsider your marketing budget, you should first research the state of the market to further inform your review of tactics and any Ad-Spend.
For example, if your business has a very high Ad-Spend with Google Pay Per Click (PPC), but you’re not achieving the conversions, this would indicate the market is curious, but no longer prepared to commit. Therefore, an alternative tactic or channel should be investigated which could help you achieve greater coverage for less investment – such as organic brand building.
Manage Your Cash Flow
Complete visibility of your cash flow within your business is essential to fully understanding and managing your financials. Whether supporting your cash flow with multiple revenue streams, establishing cash reserves, or planning and budgeting your finances well in advance, it is essential you review the cash flow of your business to understand where and how you can afford to market.
Talk to Suppliers
Communicating with suppliers is essential when calculating finances for the next fiscal year, especially if there are indicators that 2023 may be clouded by a recession. Talking to suppliers in advance will not only strengthen relations, but will help you prepare for inflated prices or reduced supply.
Look Into Grant Funding
There are several government grant funding schemes available to directly help UK manufacturers and other businesses. It’s worth seeing what funding schemes are available and how they can be used towards your marketing efforts.
How to Market in a Recession
Once you’ve budgeted for marketing in a recession, how should you approach your marketing strategy?
Refresh Your Marketing Strategy
Market strength may fluctuate during a recession – and B2B markets are not immune to this. Refreshing your marketing strategy based upon current research into market behaviour and purchasing patterns is key to having a relevant and successful marketing campaign.
Consider how the recession will affect your products and services; for instance, areas which are often hit the hardest (such as retail and hospitality) may be areas your business is heavily involved in, so adjusting your marketing in consideration of these audiences is key. For example, diversifying your offerings to tap into new markets can help bring in new revenue streams.
Focus on Customer Relations
Customer relations are crucial no matter the economic state, however during a recession strengthening the relationships you hold with customers will encourage brand loyalty, as well as word of mouth marketing and your reputation. It will also help reassure your customers that their money is well spent with your company.
The Benefits of Digital Marketing in a Recession
Digital marketing refers to marketing undertaken online, including everything from email marketing to your online visibility. In a recession, as well as in times of GDP growth, digital marketing provides a cost-efficient way of reaching national and international audiences in comparison to traditional marketing methods.
Digital marketing also allows you the flexibility you need, with the ability to track your performance and change tact almost immediately in accordance with market patterns – which is vital for reactive marketing in a recession.
Search Engine Optimisation
Search engine optimisation, or SEO, is a form of digital marketing and refers to improvements made on your website in order to tick the boxes laid out by search engines, such as Google. By adhering to the regulations and meeting the criteria of search engines, your website will be rewarded by being ranked higher in the search engine results; this means your website will be more visible to your audience as they search for terms related to your services.
As more people turn to online resources to find and vet businesses, particularly in a financial crisis where they want to find the best service for their money, it is essential to be seen online.
SEO success is built over time, offering a great option for budgeting plans which are focussed on cost-effective marketing and long-term return on investment.
Digital advertising, or online advertising, is another form of digital marketing which allows you to essentially buy your online visibility. With this, you can be found in top spots on search engines or on relevant social media pages, for example, putting your business directly in front of audiences.
For quick wins, online advertising is a great way of getting your business seen by new customers, however will require your budget to be immediately available for a (usually) short period of intense marketing.
We've worked with Nova Catering Repairs on their PPC (a form of online advertising) throughout 2022.
Recession-proof your business with marketing. As competitors slow down, speed up by...
Get ahead of your competition by marketing yourself during the economic downturn. Digital marketing provides a cost-effective and flexible form of marketing which places you in front of your target audience.
If you’re interested in discovering how a custom marketing strategy can help you, Omnisity can provide a free site audit to discuss how we can assist you.