Microsoft, Hewlett-Packard, and General Motors. Huge companies that have been around for a long time - in the case of GM, over 120 years - but what do they have in common?
They all sprung into life during a recession or depression. They were so successful, the chances of you using at least one of the products those companies make while reading this is almost even money.
With inflation still rampant, interest rates rising, and electricity bills set to soar by at least 25% after the 1st of July, Australia is staring down the barrel of a recession - the standard definition being two consecutive quarters of negative economic growth. So what does that mean for us as business owners?
Our first impulse is to cut costs across the board. Where the axe lands, that’s for the almighty to know.
However, planning to cut back needs to be a surgical strike on certain wasteful expenses, not an all out war on your profit and loss statement. Many businesses think that cutting their marketing - usually an outsourced “expense” - is a good idea during a recession. Is it, though?
With SEO copywriting being a vital plank of digital marketing, can we copywriters not only survive, but thrive in unfavourable business cycles thanks to keeping our marketing up too?
Cutting Back on Expenses During a Recession
40% of American businesses surveyed here said they would cut back on their expenses during a recession.
This makes sense from a household budget perspective - but a household is not a business. If you cut a Netflix subscription, it means no more binge watching Stranger Things. If a business excises its Zapier subscription, it means previously automated tasks need someone to complete them manually.
Value in a business isn’t always measured in profit and loss statements to begin with - but it will come back to haunt you eventually in terms of slower cash flow, which can often lead to a death spiral where more cash goes out than comes in. According to ASIC, about 20% of businesses that went insolvent during 2018-2019 was down to poor cash flow management or high cash use.
Though many companies see marketing and communication as a third prosthetic limb they can take on and off at will, it’s essential to maintain that “third arm” for keeping your current customers on side and potentially reaching new clients. According to WordStream, repeat customers are a 65% chance of conversion, while new customers are a 13% chance.
Besides, how cool would it be to have a third arm?
Case Studies in Recession Marketing
Almost every study conducted into marketing during a recession shows one outcome - businesses that maintained or increased their marketing usually did way better than their counterparts who cut back.
Buchen Advertising discovered that companies that cut advertising during the 1949, 1954, 1958 and 1961 recessions fared poorly compared to businesses that did the opposite.
The International Journal of Research in Marketing paper ‘Turning adversity into advantage: Does proactive marketing during a recession pay off?’ noted that “firms that have a proactive marketing response in a recession achieve superior business performance even during the recession.” Companies can shore up their position with some strategic, entrepreneurial marketing.
For example, during the 1990–1991 recession to improve their position, microprocessor giant Intel launched its “Intel Inside” brand-building program, aggressively promoting the brand when there was little advertising competition.
During the 2008 financial crisis, analysis by Kantar Millward Brown found that 60% of the brands that stopped all TV ad spend for six months saw their brand use decrease 24%, and brand image decrease 28%.
McGraw-Hill’s oft-cited study into the marketing habits of 600 B2B companies during the early 1980s recession showed that brands who invested in better marketing and advertising grew 275% more than those that didn’t.
The most recent example is home short-stay rental’s darling AirBnB and how they fared during the pandemic. They cut almost all their ad spend during the COVID-19 pandemic, where many jurisdictions were locked down by their governments in response. Competitor VRBO outspent AirBnB ten to one during that initial 2020 global lockdown period and saw their bookings recover by 61%, while AirBnB’s slumped by 15%.
Though we may want to tighten the belt during a recession, we really ought to be grabbing a megaphone.
Why keeping professional marketing and copywriting is important
If you use an amateur you’ll get an amateur result. Keeping on your professional digital marketing or copywriting specialists means a consistent tone of voice, branding, and audience engagement.
As information analysts and resources, they can help you identify strategies that will return on your investment more than simply “pouring more money” into PPC or social media ads. They’ll be at the forefront of new channels, techniques, and messages that cut through to people during a recession. They can explore new keywords to target or niches to penetrate. Their creativity is a value-add that you can leverage at almost every level of your business.
Outsourcing your marketing - or bookkeeping, or administration - means concentrating more on your core business and delivering more value to your customers, whether you’re a B2B or B2C business. Everyone needs their dollar to stretch further. Figuring out how to do that with what you have is a big boon for business once the recession passes.
Further, copywriters and marketers are natural networkers. They have their ear to the ground when it comes to new trends, grants, and other opportunities that could come your way.
working with your marketing or copywriting team
Though you may be fretting that dreaded phone call to tell your faithful marketing or copywriting firm “your services are no longer required” it’s better you work with us rather than cutting us off altogether.
Though you may have ordered a blog post every week, it’s unwise to just “stop.” Tapering that back to once a fortnight or month means your SEO won’t stand still compared with the competition who is still investing in their digital marketing - if you stop, they can and will overtake you.
You may want to invest in content at scale using AI while your copywriter edits it using their skills in Artificial Intelligence Optimisation. Even if copywriters become “obsolete”, there are still some opportunities left out there for us!
If you stop advertising or content marketing until you “ride out the storm,” playing catch up may end up costing far more.
Oh, and you know we’re a GST deduction, right?
So, should you cut back on marketing during a recession? I think the evidence speaks for itself.
Get ahead of your competition and invest in award-winning, cut-through copywriting and marketing with I Sell Words!