BUYING INTO A MYTH?

Marketing Myth #2: Cutting marketing budgets is wise in a recession

With a possible recession looming, corporate America is starting to cut back on marketing expenditures. But a growing body of evidence suggests that bad times are a good time to go on the offensive with your marketing – both in terms of advertising and new product launches.

Let history be your guide
During a recession, marketers who increase their Share of Voice (SOV) – i.e., their ad spending relative to competitors – tend to grow their market share and profits in the years following a recession.

From recession to long-term profitability
In his seminal study, Advertising in a downturn, marketing data scientist Peter Field found that cutting budgets in a recession only helps profits in the short term, with the brand ultimately emerging weaker and less profitable.³ Building on this study, he examined 50 brands during the Great Recession and found that both B2B and B2C companies succeed when their Share of Voice outpaces their Share of Market (SOM).

Some things to consider before spending
Due to downward pressure on media costs and competitors spending less in a recession, you may be able to increase SOV even with a flat budget. In addition, it makes sense to shift your budget toward brand building rather than activation campaigns. The latter are likely to be less effective when people have less to spend.

Got a new product? Don’t wait to roll it out.
Harvard Business Review points to a wide range of research that indicates “products launched during the recession have both higher long-term survival chances and higher sales revenues.”⁵ Why? Fewer product introductions from competitors. Plus, companies cast a more critical eye before greenlighting products in a difficult business climate.

If today’s uncertain economy has you questioning your marketing investments, let’s talk now ›

¹ Forbes, “When A Recession Comes, Don’t Stop Advertising”, Sep. 2019
² Harvard Business Review, “Don’t Cut Your Marketing Budget in a Recession,” August 2020
³ Peter Field and IPA, Advertising in a downturn, 2009
⁴ Peter Field and LinkedIn B2B Institute, January 2021
⁵ Harvard Business Review, “Don’t Cut Your Marketing Budget in a Recession,” August 2020

Marketing Myth #1: Demand generation is king ›
Marketing Myth #3: Customer loyalty beats customer acquisition ›
Marketing Myth #4: Well-known brands don’t have awareness problems ›
Marketing Myth #5: B2B campaigns should be rational, not emotional ›
Marketing Myth #6: The purchase funnel is still a thing ›
Marketing Myth #7: Marketing is secondary to sales in B2B ›
Marketing Myth #8: Repeating what works will keep on working ›