How Does a Recession Affect Marketing?
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Marketers, fasten your seatbelts! You’re about to enter a rollercoaster! A market downturn will result in challenging market conditions. It also forces companies to come up with innovative and cost-effective market strategies. The intelligent marketers will come out victorious! Let’s look at how a recession affects marketing.
The marketing department is affected by a recession by buyers being more cautious of investments. The pressure for proven returns on marketing expenditures will increase. Furthermore, value-based marketing will become more important as marketers need to tackle the decline in consumer confidence.
The Great Recession in 2009 has taught us, marketers, a lot. It’s allowing us to navigate the upcoming troubled waters. However, you better have a solid ship or start building one as soon as possible.
By a solid ship, I mean your marketing strategy. Marketers are going to be tested, challenged, and need to be adaptive to change. The need for marketing optimization will now be more important than ever.
For many marketers, an economic downturn causes fear. But it’s actually a very exciting time. It’s a time for innovative marketing strategies and a time for smart and strategic moves.
You need to achieve your business objectives with budget constraints and fewer resources.
There is a quote that I love from Warren Buffet, one of the best investors that ever lived.
Be fearful when others are greedy, and be greedy only when others are fearful.Warren Buffett
A recession is causing fear in many marketing departments. However, for intelligent marketers, it’s an opportunity to differentiate yourself from the competition. The moves you make now are going to deliver a huge impact on your business. During and after the recession.
So, in order to guide you through the upcoming economic downturn, we will look at some ways marketing departments are affected by a market downturn. This will allow you to alter your B2B marketing strategies so you can build an icebreaker instead of a small ship.
1. The pressure to prove marketing return on investment will increase
Don’t get me wrong, I always think marketers should know exactly how much their campaigns are contributing to a business. However, the internal pressure will become greater on the marketing team to prove return on investment during a recession.
This has a couple of reasons:
- There will be budget constraints. Marketers need to do less with more.
- Sales cycles will take longer which means the cost of sales will become higher.
- Investors in your company will be stricter with your expenditures.
This means that the need for excellent marketing reporting will increase as well. Your marketing system needs to be optimized in order to report on marketing campaigns more effectively.
Enterprise organizations often use a CRM such as Salesforce or Hubspot. Make sure that your CRM provides the reporting capabilities that you need to prove your marketing ROI. The pressure from your sales team will increase as well.
It will be harder for sales to sell your product or services so they will need extra help in lead generation.
Event marketing is a prominent lead generation strategy for B2B marketers. Here is how to set up the ideal dashboards for your events.
B2B sales cycles generally take about 6 to 9 months. However, buyers will be doing more due diligence on their investments. This means that it’s likely that the duration of a sales cycle will increase.
This also means that your company has to spend more resources per new customer. Consequently, the cost of sales will become higher and this impacts your marketing return of investment.
2. The effect of a recession on advertising: Increase advertising spend.
During a recession, many companies will cut advertising in order to save money. On the contrary, your advertising spend in a recession should actually increase!
During the Great Recession, advertising spends decreased by 13%. It makes sense, companies are forced to cut back expenses and advertising might be an obvious one to scrap.
However, there are studies that date back centuries that actually show benefits to increase advertising during a recession. Companies that kept advertising actually increased sales and market share during the recession and most importantly, afterward!
Here is why.
- The advertising market will become less competitive. This means you can purchase more ad spaces with the same budget. If there is less noise on the market, you can increase the number of eyes on your advertisement. This will increase the likelihood of your target audience recognizing your brand!
- You will show your potential buyers that you have corporate stability and they don’t have to worry about your product or service going bankrupt.
- Your Share of Voice will increase compared to your competitors. Usually, an increased share of voice means that you will capture a larger market share.
You need to start architecting your advertising platforms to be prepared for the recession. Your advertising strategy should be ready to go. Programmatic advertising is an absolute must to get the best prices for advertising space automatically.
During a recession, you shouldn’t just throw more budget against the advertising wall. Your system should be perfectly optimized and you should only target potential buyers or your named account list. Alternatively, show ads to people depending on where they are in the sales cycle.
Just because the advertising market will become less saturated, it doesn’t mean you shouldn’t optimize your campaigns. Programmatic advertising allows you to integrate advertising platforms with your CRM. This is incredibly important because it allows you to place advertisements to companies that just became a sales opportunity.
This will help sales to create extra awareness in an account and consequently increase the return on marketing investment. The effect of a recession on advertising is the need to increase spend.
3. Marketing campaigns need to be more targeted
A recession affects marketing through the need to deliver highly targeted marketing campaigns.
In my previous point, I highlighted the need for more advanced advertising targeting. However, the same applies to all other marketing campaigns. This includes content syndication, digital lead generation, event marketing, and other content marketing campaigns.
Every marketing campaign costs money and a recession poses stress on many departments. One of the key departments that marketing is collaborating with, is the sales department. During a recession, sales will be expecting more from marketing. In healthy market conditions, marketing is expected to source 30% of the sales pipeline.
However, during a recession, the sales team will be expecting more from marketing. This means that your campaigns and events will need to deliver high-quality leads that sales can work with straight away.
Your marketing budget is more valuable during a recession. You need to make sure that you are allocating your budget to target only your prospective customers.
If you are working with external vendors to facilitate digital lead generation, you need to make agreements on the deliverables. You only want to receive leads from your named account lists or leads with a high buying propensity.
The events that you sponsor should be more targeted as well. You should only attend events if your named accounts are attending that trade show.
You can request delegate lists from event vendors that you can map against your database. At least 40% of the total amount of event attendees should be from your named account list. During an economic downturn, this number should be increased.
If you want to come out of a recession victorious, your marketing strategy should be highly optimized and targeted. Here are 6 digital marketing strategies to drive more revenue during a recession.
4. Marketing needs to be more effective
A recession is also affecting the marketing department by the need to deliver more effective marketing.
This doesn’t just mean campaign optimization. The entire marketing department must work at maximum effectiveness.
All the campaigns that you do should be integrated into each other. The events that you do should have a strong digital marketing strategy to support them. Also, consider hosting virtual events.
Virtual events are a cost-effective way to drive a lot of value to your company. Here is how to set them up.
Your lead warm-up nurture should be highly optimized. This includes developing email nurture streams based on:
- The industry of your lead;
- The buying stage;
- Intent-based nurture programs;
- Persona-based nurtures.
Needless to say that this should be integrated with your sales department as well. As soon as leads are warm enough for sales you should throw this hot bun to sales. They should follow the leads up the minute they came out of your marketing oven.
The marketing department itself should also aim to work at maximum effectiveness. The skills of your staff should be used correctly. You should create an atmosphere of growth and set up teams where people can learn from each other.
The need to challenge your team members will increase. This also means that an atmosphere of asking questions should be promoted. By challenging yourself and team members, you will be able to create more effective marketing campaigns and infrastructure.
A time of economic downturn is a great time to come up with innovative campaigns that will set your company apart from the competition. This is the time to shine with less competition in the market.
5. The need for value-based marketing increases
An impact of a recession on marketing is the decline in consumer confidence. Companies will be doing more due diligence on investments. Especially if you are selling technologies.
The decline in consumer confidence can be countered by improving your value-based marketing strategy.
With value-based marketing, you market your product based on the values it will deliver for your customers. This seems obvious but in practice, this doesn’t happen too often.
Technology companies are often focused on selling their products through features. This is called feature-based selling and marketing.
This is fine for small deals but if you want to land big deals, you need to talk about the value that you will deliver for a company.
In a recession, this becomes more important. Companies will be stricter in their purchase but it will be easier to sell if they understand what value you will generate for them.
Perhaps your software will help companies with digital transformation. Maybe it will improve the productivity of developers so that there is more room for innovation. Perhaps you are able to optimize missing critical systems for large enterprises. This is valuable for a company.
This is also what you need to be communicating in your marketing messaging. Implement value-based marketing and you will score much larger deals. It's a critical strategy to recession-proof your marketing.
6. Customer success stories become more important
Customer success stories should be a key pillar of your B2B marketing strategy. However, marketing in a recession emphasizes the importance of customer success stories.
As mentioned, during a market downturn, consumer confidence declines and companies will be limited in the number of products and services they can purchase.
By having a large database of customer success stories, you will be able to communicate to companies in similar industries what value you bring for similar companies.
Companies in the manufacturing industry want to see how you’ve helped other companies in the same industry. This is a part of value-based marketing.
However, don’t limit yourself to written case studies on your website. Invite your happy customers to speak at tradeshows and other conferences. Perhaps you can invite your customers to executive round tables.
This is incredibly powerful. Imagine that it is your responsibility to make large software purchases at your company. You would want to understand what value software brought to other companies in your industry.
You have to put yourselves in the shoes of your buyers.
Collaborating with happy customers in your marketing strategy will reap you great benefits. It will also increase the level of trust of your buyers. In times of an economic downturn, this is immensely valuable.
Reduce the effect of a recession on marketing by incorporating customers in your demand generation strategy.
7. Account-based marketing becomes more important
Account-based marketing in a recession will become more important. Earlier, I’ve highlighted the need for marketing to become more targeted.
Account-based marketing is a highly targeted go-to-market approach. During a recession, the need to use your resources effectively increases.
Through account-based marketing you will make teams with sales, customer success and channel managers to develop a plan to sell to a targeted list of accounts.
This is a highly targeted approach to going to market and it makes sure that interdepartmental goals are aligned.
From a global marketing team perspective, they will focus on a one-to-many ABM approach. They will run marketing campaigns that target the full named account list.
The global marketing team will also run campaigns on a one-to-few ABM approach. This means running campaigns to a segmented part of your named account list.
The field marketing team is the team that will collaborate closely with sales. The field marketing team will form a team with sales, customer success, and the channel team. The goal of this team is to develop a one-to-one ABM approach. This basically means that the goal of this team is to sell to one particular account.
These are typically large enterprises with an expected deal size of at least $500k. Here are 9 actionable Field Marketing Strategies to increase revenue.
By effectively using your resources, you will come out of a recession victorious.
The impact of a recession on marketing can be significant. The good news is that if you have a good marketing strategy, that you will beat the competition. A recession is a great opportunity for the marketing team to be innovative.
Marketing in a recession is an exciting time for marketers who like to be challenged. A recession provides opportunities for business growth. However, you need to use your intelligence and put in the effort.
Be fearful when others are greedy, and be greedy only when others are fearful.Warren Buffett