Even if very few people are saying it out loud, it’s pretty clear to everyone that we’re heading for a recession. Still reeling from the impact of the pandemic, the Western economies are now suffering a cost-of-living crisis largely due to spiralling energy costs brought about by sanctions on Russian oil and gas. And, of course, all this is exacerbated in the UK by the ongoing effects of Brexit.
But we’re not in recession…
Not yet anyway. Generally speaking, a recession is defined as a period in which GDP falls for two successive quarters. The US declared in June that it’s in one already and the numbers suggest we’re soon to follow. UK GDP for June 2022 (Q2) was down 0.1% and as the end of Q3 approaches the outlook isn’t great: the Q3 forecast is a continued decline of 0.1%, slipping to 0.3% for Q4.
The good news is that if you’re smart, facing a recession today is a far less daunting prospect than even a few decades ago.
Don’t ‘go with your gut’
At times like these intuition is rarely a reliable guide. The obvious, instinctive, reaction to straitened circumstances is to ‘batten down the hatches’, ‘tighten your belt’ and all those other austerity clichés. By all means keep costs down wherever possible and ensure your business is as lean and fit as possible – but as recession looms, now is the time to maintain or even increase your investment in digital marketing. Actually, the same goes for all forms of marketing!
The lessons of history
Roland Vaile and Reavis Cox researched the 1920-1921 post-World War 1 recession and found that companies that maintained their investment in advertising out-performed their competitors in terms of both sales and growth. Those that cut their advertising spend saw a downturn in performance that continued for years after the end of the recession, while those that continued to advertise also continued to improve in performance for years. The principle still stands in more recent times: McGraw Hill’s research shows that businesses that increased their advertising budgets in the 80s recessions grew at almost four times the rate of those who simply maintained or reduced budgets.
“…that is what that research shows, right, that essentially folks who invest in marketing, in sales during a recession tend to outperform and more quickly outperform their competition as markets resume.”
Rand Fishkin, Moz founder and SparkToro co-funder
Recession-proofing your business through smarter revenue generation
The good news is that if you’re smart, facing a recession today is a far less daunting prospect than even a few decades ago. That’s largely because digital marketing and internet advertising give you unprecedented data feedback with which to fine-tune your targeting and ensure the maximum possible ‘bangs per buck’. Even 30 years ago they were at best aiming at their targets with a shotgun – whereas today you have a rifle with telescopic sights in your hands. And of course smarter targeting makes for smarter revenue streams – absolutely vital when times are tight.
Stay on top by staying in sight
In paid media terms, continuing to invest can pay dividends. With many businesses succumbing to the temptation to cut marketing spend, you can take advantage of reduced cost-per-click and cost-per-impression to capitalise on and grow your key audience.
And then there’s SEO. It offers a fantastic investment and ‘hedge’ in terms of maintaining your profile as your competition falls by the wayside – so it’s a great way of sowing the seeds for post-recession success. What’s more, because activities such as diligent SEO keyword research are a function of effort rather than simply money, SEO offers the best ROI of all types of online marketing.
The smart way to survive and thrive
In summary, when recession looms, don’t cut back – maintain or better still increase your investment in digital marketing for a smart way not just to survive but actually to thrive during and after the crisis period.