The Benefits of Investing in Advertising During Economic Downturns
We get it. It’s a struggle out there for many businesses right now, with operating expenses rising and the cost of living crisis hitting customers – making it harder and harder to win new business and keep existing customers spending with you.
Factors like these, plus the uncertainty around the election, can make things tough for some businesses, …but they don’t have to be. In fact, if businesses invest in advertising during an economic downturn, research has shown they can actually come out stronger on the other side.
How can digital marketing help?
Advertising can help you stay top of mind
When people have uncertainties about the economy and the near future of their businesses, they’re more likely to stick with brands they know and trust. By continuing to advertise, you can make sure your brand stays top-of-mind with potential customers. Ongoing brand awareness Display and Search advertising is critical for this, alongside a consistent and relevant social media posting presence.
Advertising also helps you build relationships with your existing customers
Done right, it’s an effective way of staying in touch with your existing customers and building relationships with them. This is super-important in tougher times, meaning that when the economy recovers, your customers will be more likely to do business with you if they have a good relationship with you and you’ve kept your brand top of mind during a slower economic period.
Advertising also helps position yourself as a leader in your industry
Right at the time when competitors are cutting back on their marketing, you can stand out by continuing to invest in your marketing. This helps you position yourself as a leader in your market, and attract new customers.
Multiple studies have shown that continuing to invest in marketing during economic downturns can be of enormous benefit to businesses who do so…
Post the Global Financial Crisis (approx. 2008-2011) the NZ Institute of Economic Research (NZIER) published an extensive report on business activity and results coming out of the recession. Their 2013 report provides some valuable lessons that came out of the downturn. Importantly, they found that business success very much depends on your attitude to business – an old but very true notion. The drawn-out late 00’s recession was painful for many, but in the slow economic recovery, the highly motivated businesses (calling themselves ‘Business Builders’) were the most successful.
Image Source: NZIER report to MYOB
The “‘Business Builders” had a clear goal in mind: to grow their business. They were doing more of everything, from customer acquisition to product diversification.
Five keys to success emerged from this group, which included:
- Retaining and growing their customer base – market share went to those who looked after their customers, allowing them to acquire those who were not being looked after
- Marketing effectively – consistent with the above strategy
- Investing in their business – such as a good CRM system, providing greater insights into customer behaviour and market segmentation (we’ll touch on this later)
- Investing in staff – hiring more people and paying them more, particularly those after part-time or casual work given the uncertainty of future economic positions (provides flexibility in future)
- Getting the basics right – in particular, prices and margins and ensuring their product mix met customer needs
It’s clear from this research and more that continuing to remain positive and aim for growth – using marketing and advertising as a key tool – has long-term benefits for businesses who are able to invest.
Being Smart About It
Of course, it’s important to be smart about your advertising during uncertain economic times. You don’t want to waste money on marketing that isn’t effective. Here’s our top tips for effective advertising during an economic downturn:
- Target your advertising carefully. Make sure your advertising is targeted to your ideal customers. This will help you get the most out of your advertising budget.
- Focus on value. In a tough economy, people are looking for value. Make sure your advertising highlights the value of your products or services.
- Be creative. In a crowded marketplace, you need to be creative with your advertising. Find ways to stand out from the competition. Remember the rule; “When intent is low, creative needs to be high”. Don’t be afraid to push the boat out a little, show some humour or other techniques to help you break through in consumers’ minds.
- Track your results. Make sure you’re tracking the results of your advertising so you can see what’s working and what’s not. With the advent of advanced A.I. tools as part of ad platform’s targeting systems, conversion tracking is critical. It helps optimize your advertising campaigns and gets the most out of your investment.
By following these tips, you can continue to invest in advertising during an economic downturn and reap the benefits. So don’t necessarily cut back on your advertising just because the economy is tough. Instead, use this time to position yourself as a leader in your industry and attract new customers – and you’ll have a better chance of retaining old ones.
By offering creative and effective advertising, businesses can still thrive during economic downturns. So don’t be afraid to invest in advertising when times are tough. It could be the best decision you make for your business in the long term. Talk to our team soon for assistance on your advertising plans for the coming months.