As the macroeconomic climate continues to be challenging and uncertain, we are facing yet another global downturn and many companies have already started or will soon start making changes to their budgets. 

During periods of fiscal stress, many marketers will be tempted to abandon their advertising strategies in order to save money for their companies. But there is a downside to this approach. Staying the course offers much greater rewards and looking at past recessions, we have proof of that!

What past recessions have taught us about advertising strategies

There are studies dating back decades that show the benefits of advertising during an economic turndown. Companies that kept advertising increased their sales and market share during these challenging times and most importantly, there was a long-lasting effect.

At the Cannes Lions International Festival of Creativity 2022, Analytic Partners, an independent global leader in analytic solutions, presented their research results focusing on the latest recession. Their study shows that brands who cut their marketing budgets left themselves at a long-term disadvantage. During the Great Recession of 2008/2009, advertising spend decreased by 27%. Analytic Partners’ research revealed several insights supporting the case for maintaining, or increasing, marketing budgets in an economic decline: 

• 54% of brands that stayed on course and did not cut marketing budget saw return on investment (ROI) improve;
• 60% of marketers who raised their spending realized a better ROI (in %);
• 52% of brands recorded an ROI upward trend over a two-year window.

Turning to media spend, the analysis showed:

• Brands that boosted their media spend logged a 17% expansion in incremental sales (incremental sales is a KPI used to gauge the efficacy of a marketing campaign);
• On average, brands that cut back witnessed an 18% contraction on this measure;
• Two-thirds of losses in incremental sales resulted from lower media spend, not a drop in ROI.

Why does it yield good results to continue digital advertising during a recession?

During an economic downturn, the digital advertising market becomes less competitive and less crowded, and ad costs go down. This means you can purchase more ad inventory without increasing your budget. 

Furthermore, if there is less ‘noise’ out there, the number of people who see and click on your ads will increase. The likelihood of your target audience recognizing and engaging with your product or brand will also grow.

During times of recession, buyers become more cautious about spending their money. Now is the time to show your potential and existing customers that your business is stable, and they can count on your product, service, and brand in the long run.

Your online presence and share of voice (SOV), your part in the conversation taking place in your industry – all these will increase and give you a competitive advantage. Usually, an increased share of voice in the marketplace means you will capture a larger market share.

It’s not a cliche: history always repeats itself. So, we need to learn from it. Our advice for marketers is to stay on course and maintain media spend during the recession. If possible, even increase it. 

Also, you’ll need to ‘repolish’ your digital advertising strategy to get ready for the recession. Start architecting your advertising platforms today. Programmatic advertising is an absolute must to automatically get the best prices for ad space, together with optimal targeting and performance.

And as Warren Buffet, one of the greatest investors of our time, said: “I will tell you the secret to getting rich on Wall Street. Be fearful when others are greedy, and try to be greedy when others are fearful.”