The storm of the pandemic has soothed, But we can't help but worry about what's to come. The economy is struggling, Inflation is rising, and there's talk of an energy crisis. Many businesses are probably thinking of cutting costs, but what if we told you there is a profitable way through this?
Having the right vision
It’s all about changing your perspective towards recessions, and change requires adaptation.
Short-term thinking kills brands.
Firstly, businesses consider reducing their marketing budgets. Often, the first move is to cut brand spending and move this into the lower end of the funnel to target more immediate sales.
We think this short-term thinking is a mistake because it's not so much that consumers do not want to spend; it’s that they are unable to.
When businesses cut costs, they risk losing their position at the top of the consumer's mind. And when their finances are less constrained, it can result in declining sales.
Secondly, it reduces overall brand presence, leaving the door open to competitors to steal share of voice and market share. Research shows that companies that maintain or increase their marketing spend during a recession outperform those that cut back. Not only did they increase their budget, but they changed what they spent it on.
An article from marketingweek stated that “two-thirds of losses in incremental sales during the last recession were driven by lower investment in media.” Which also shows that cutting costs is cutting growth.
Recessions create opportunities
Luckily, competitors are probably also going to cut costs. When executed right, businesses can outperform competitors by maintaining a solid presence during recessions and come out of them better than before.
Adapt, don’t cut
One of the most important things a business can do during a recession is to continue spending in the right places. This means ensuring that money is still being funnelled into areas that will help the business grow and recover.
As the first paragraph states, don’t cut top-funnel investments; focusing on awareness and improving branding. And also, do not focus on investing in bottom-funnel conversions. Again, many consumers probably do not have the financial space to buy. Therefore it is vital that when they do have money that, they still know where to find you.
Another article by Marketingweek stated that maintaining a solid and consistent brand identity can result in a 10-20% growth increase.
The best thing to do is not to keep all funding on all stages of the funnel, but focus on adapting your strategy. Businesses need to make well-informed decisions about their marketing. Now, I can hear you thinking, “How am I going to make well-informed decisions?”.
The answer to that question is: Consumers will have less money to spend, but they have infinite amounts of data to give when being present online (with consent, of course).
Data-driven businesses have an advantage.
A data-driven business has a significant advantage in a recession because it can rely on historical data to make informed decisions. This was evident to us during the COVID-19 pandemic, when clients who utilized AI and machine learning saw an increase in their share of voice and growth.
This is because they could track the customer journey with full attribution tracking, meaning they could see where to invest their marketing efforts for the best results. In other words, data-driven businesses are able to adapt and adjust more quickly to changing market conditions, giving them a clear advantage in times of economic instability.
With AI and machine learning, businesses can create highly optimized budgets. These machines are able to find the best cost per conversion, thanks to AI's algorithms. This saves businesses money as they can determine the maximum amount they want to spend on a campaign, and the AI will figure out the rest. In many cases, AI is able to find better results when spending less! Thanks to these advancements, businesses can save time and money while still getting great results from their campaigns.
Channel optimization increases performance.
Marketers today are bombarded with data from multiple platforms, making it difficult to get a clear picture of their campaigns' performance. This can lead to excessive spending and inefficient use of resources since marketers need to analyze all these channels individually.
However, businesses implementing AI and machine learning solutions can avoid these problems. All of their marketing data is collected in one place, allowing marketers to see how their campaigns are progressing and make necessary adjustments. In addition, these businesses can use budget optimization to ensure that their campaigns run smoothly and efficiently.