4 Tips to Maximize Your Marketing Budget During an Economic Downturn
Inflation, market volatility, and supply chain issues are just a few of the forces disrupting the digital advertising ecosystem. With 75% of US consumers convinced the country is headed toward a recession, and a similar number having cut or steadied overall spending, brands will need to reevaluate their marketing budget and plans for 2023.
According to a VAB report, 2022 ad spend growth in the US has decelerated from 20% in 2021 to 12% and may slow down to 5% in the coming year. And while marketing teams are often the first to face budget cuts when economic hardship arises, research shows that pulling back on ad spend can do more harm than good in the long term.
Nielsen Marketing Mix Models show that brands that pause spend can expect to lose 2% of their long-term revenue each quarter and, when they resume media efforts, it can take 3-5 years to recover brand equity lost during downtime. On the other hand, brands that weathered the storm and increased media investment were rewarded in the end – realizing 17% growth in incremental sales.
4 Tips to Recession-Proof Your Marketing Strategy
During an economic downturn, the solution isn’t to halt marketing investments, but rather, to invest smarter. Check out our tips for building a recession-proof marketing strategy below.
1. Establish clear goals
Determine which metrics matter most to your business and optimize your media mix toward channels yielding the highest returns. To help solidify marketing’s position as a growth engine – and not a cost center – highlight key wins and the data-driven decisions that led you there. Pause any projects that aren’t tied to current goals and make sure to clearly communicate the long- and short-term value of your efforts.
2. Put performance first
While brand-building initiatives will help to support your long-term goals, it’s important to distribute your marketing budget across both upper and lower-funnel campaign efforts. The following channels offer performance-based pricing models to help de-risk ad spend and drive positive ROI at the bottom of the funnel.
Social media marketing
Leveraging performance-based campaign objectives across social platforms like Facebook and Instagram can help you to reach and convert highly engaged audiences on a cost-per-action basis. During times of economic uncertainty, Meta recommends embracing media strategies to drive growth, like broad targeting, and approaches that enable machine-learning systems to find efficiencies, like auto-bidding.
Learn how AdParlor (Fluent’s digital media arm) can help to scale your paid social programs and drive profitable growth here.
Affiliate marketing
Affiliate marketing continues to earn an enhanced reputation as a cost-effective channel for customer acquisition. Whether you’re looking to drive purchases, newsletter sign-ups, or app installs, user activity is attributed back to the affiliate source – meaning you only pay for results that matter. By working with a performance partner, you can identify your top-performing audience segments and target consumers with the highest likelihood of generating value.
Learn how Fluent can help you reach untapped audiences on a pay-for-performance basis here.
3. Practice empathy
Your finance team isn’t alone in tightening its purse strings. Consumers are also feeling the strain of rising prices and looking to get the most bang for their buck. While 93% of US adults are cutting back on their purchases due to inflation, a survey from Ipsos found that 73% of shoppers are willing to buy from companies that increase their prices if they feel valued as a customer.
Be sure to update your copy and creative based on changes in consumer spending, and leverage first-party insights to deliver personalized messages across channels. Showing sympathy for the difficulties consumers are facing now can go a long way toward earning long-term trust. By addressing consumers’ concerns head-on, you can also highlight what your brand is doing to help meet their needs.
4. Reward loyalty
While broad promotional offers and discounts can drive quick wins, they also condition shoppers to seek and expect deals – a dynamic that may hurt your bottom line, especially considering 52% of US consumers will only buy a product if it’s on sale. A loyalty program can help to drive more sustainable growth, creating long-term value via frequent consumer touchpoints and custom benefits.
Offer consumers exclusive discounts, members-only pricing, and immediate rewards for joining your rewards program. Not only do loyalty programs reinforce a brand’s commitment to its best customers, but they also yield first-party data that can be used to enhance engagement and personalization for future offerings.
Learn how Fluent can help you grow your loyalty program and build a robust first-party data asset here.
Setting Your Business Up for Success
Staying quiet during a recession leaves the door open for competitors to snag customers and market share. While it may not be feasible to adopt a business-as-usual approach, marketing still has a key role to play in keeping your business afloat. By maintaining a healthy marketing budget, you can keep your brand top of mind and remain the go-to choice in your category when spending returns to normal.
If you’re looking to drive positive ROI in an uncertain economy, Fluent can help. Connect with us here to get started.