Recession. Everybody talks about it, and for that reason I’ve been trying to avoid the topic, but I can’t avoid it any longer. But instead of contemplating on how deep or how long the downturn is going to be, I decided to look into it from a marketing perspective; how to conduct marketing in a recession? What’s the result if you cut the marketing budget? 

The Economist magazine has put together an interesting (and somewhat biased) analysis of what happens if you cut your advertising in a recession. To summarize their view, if you cut your budget you are screwed. The Economist being a printed magazine of course has to say advertising should not be cut, and also undermines online as a marketing medium by showing it as a simple display ad/search channel. Nonetheless, it’s an interesting read. 

 

Some excerpts: 

“Brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost during good economic times.” 

-Professor John Quelch, Harvard Business School. 

According to The Economist it takes years for sales to recover from a heavy advertising budget reduction:

Harvard Business School is not the only university, which believes that recession is a time of opportunity for marketers. This from PennState:

For well-positioned companies, an economic recession should not promptmarketing cutbacks, but rather an aggressive increase in marketing spending to achieve superior business performance according to research authored by Gary Lilien and Arvind Rangaswamy of Penn State’s Smeal College of Business.

“Turning Adversity Into Advantage: Does Proactive Marketing During a Recession Pay Off?” is forthcoming in the International Journal for Research In Marketing. The study finds that firms entering a recession with a pre-established strategic emphasis on marketing; an entrepreneurial culture; and a sufficient reserve of under-utilized workers, cash, and spare production capacity are best positioned to approach recessions as opportunities to strengthen their competitive advantage.

“Athletes often choose times of stress to mount attacks: strong runners and bicycle racers may increase their pace on hills or under other challenging conditions,” the authors write. “In a similar vein, proactive marketing includes both the sensing of the existence of the opportunity (a tough hill and fatigued opponents) and an aggressive response (possessing the necessary strength or nerve) to the opportunity.”

The consensus seems to be overwhelming – academic journals, professional marketing blogs and marketing sites all think budgets should not be cut.

The next interesting question is should we now do something different? Every second blog and marketing site thinks that you should. Here’s some examples:

Marketing during Recession
Top 8 Strategies to Marketing in a Recession
Recession Proof Products: 5 Ideas to Win Sales