Is Digital Marketing a Smart Investment During a Recession?

Written on 11 May, 2020 by Julia Hammond
Categories Marketing

As the world reacts to the ongoing COVID-19 (or coronavirus) crisis, we’re facing many new and some not so new challenges. One of the new challenges is self-isolation and the push to stay at home in a bid to fight this infectious disease. With businesses being asked to temporarily close, talk is turning to the potential for an economic recession like we haven’t seen in decades, or perhaps even a century. But this is far from our first economic downturn, which means this is a challenge we’ve seen before. The question is how do businesses survive a recession? How did they do it in the past? How can they do it again? And where does marketing fit into the survival strategy?

Looking at the research and historic examples from past recessions, we’re going to show you how digital marketing is not only a smart investment – it could be the thing that saves your business.

The catch-22 of cutting costs

Examples of business success during recession

How recessions alter consumer behaviour

The 2 most essential marketing campaigns

Top 5 tips for marketing in a recession

When no one is willing to spend, everyone loses

It should come as no surprise that in times of economic strife both businesses and individuals take a very careful approach to their finances. Businesses often look for budget cuts that will minimise layoffs, which is how the marketing budget finds the spotlight. While individuals take their time in choosing which purchases are essential and which are not.

There are two key issues that arise here:

  1. Brands who stop marketing lose brand awareness, market share and eventually trust with their customers
  2. Customers who are spending more carefully rely on measures such as price and brand trust to make their final choices

In this, we find a vicious cycle whereby cutting your marketing budget means losing customers, losing customers means less revenue to reinstate your marketing budget.

From 1920 to 2009: marketing always wins

It’s all well and good to talk about the importance of your marketing budget, but can we prove it works? Studies going back to the Great Depression almost a century ago have continually found that strategic marketing during times of recession helps companies succeed both during the economic downturn and in the early recovery stages. Here are some examples:

  • In the 1920s leading cereal brand Kellogg’s doubled their advertising spend. The results were a 30% increase in sales and toppling their fiercest competitor at the time, Post.
  • In the 1970s Toyota resisted the urge to cut their ad spend, and by 1976 they were the top performing imported car-marker in the US – overtaking Volkswagen.
  • In the 1990s fast food chains Pizza Hut and Taco Bell saw an opportunity for growth when market leader McDonald’s took a step back. They achieved 61% and 40% growth in sales respectively.
  • In 2009 Amazon began the digital book revolution with its innovative, cost-effective Kindle; managing to launch their new product on the back of an economic downturn and boost sales by 28%.

More than once, brands have proven that maintaining your marketing during a recession is worthwhile. There are three main reasons experts believe this to be true:

  1. The competition is lower during recession as many brands either drop out of the race or refocus their messaging to niche target markets
  2. Brands who invest in marketing project corporate stability and engender greater consumer trust
  3. Brands who drop their marketing efforts lose ‘share of mind’ which in turn, means losing their share of the market.

How a recession changes consumer behavior

It’s worth noting that in times of economic prosperity, rising revenue is not due to marketing alone. It’s also because many people have disposable income and confidence in the economic climate. In times of economic doubt, we need to recognise that this social attitude has changed – and our marketing must change with it.

We see new customer segments emerging which are less about demographics (like age or income) and more about psychological responses, for example, while some people choose to veto all non-essential spending, others maintain a small budget for leisure activities. In all these psychological segments the customer journey is much longer than usual. Customers focus on durable goods and will take their time researching before committing to a purchase. They also tend to rely on brands they know and trust.

Overall, we see greater focus on essential spending (like food, clothing, health and wellbeing) and less spending on treats or desired items whose purchase can reasonably be put off.

Simple example: a meal out with friends may be swapped out for a cheaper dinner party at home. It’s not that we no longer desire the meal out, it’s that we no longer view it as necessary.

This is where clever marketing can help build on the perceived value of such an activity. For example, a meal out with friends is not only providing you with essentials like food, it’s also providing social connection. By focusing on the perceived value of your brand’s products or services, you can help consumers understand how they’re getting more than the monetary value. It’s also why brands willing to sacrifice some revenue to give their customers monetary incentives right now do better than those who don’t.

The 2 most essential campaigns

There are two types of marketing campaigns that work better than the rest in times of economic strife – brand awareness and nurture.

Brand awareness is important to maintaining your ‘share of mind’ and essential for building trust among your customer base. It’s also worth noting it’s cheaper to maintain brand awareness with your existing marketing campaigns than it is to rebuild later on.

Nurture campaigns engage loyal customers who have interacted with your business before. A customer retention rate of just 5% can lead to anywhere from 25-85% of profits. Happy, frequent customers are more likely to provide word of mouth recommendations and purchase larger quantities of your product or service as they no longer have questions on the quality.

Top 5 tips for marketing in a recession


1. Customer insights are your best friend

Customer insights are more important than ever. Running fewer, highly targeted campaigns will help you to reach the audience that is most likely to convert into a customer for your business. Learn more about customer insights in our previous blog.

2. Retain, retain, retain

A company’s biggest asset during a recession is their existing customer base – whether it’s a B2B or B2C industry. It’s estimated that the cost of a new customer is 6x higher than the cost of retaining one. Loyalty programs are an effective way to engage repeat customers and increase referrals. You could offer rewards for repeat purchases, recommending services to a friend or signing up to your email list. Just think of how simple yet effective coffee cards are; a series of small purchases that finally add up to one big reward.

3. What do your customers value?

Is there a way you can add extra value to your product or service for free? Examples could be a nutritionist or gym providing a free guide to healthy eating on a budget, or a financial service providing templates for long-term goal setting. These extra incentives could set you apart from your competitors.

It’s also important to consider what your customers value right now. In times of uncertainty, people frequently rely on their friends and family to get them through. Focusing your marketing on these connections will show customers that your business values the same things they do. To use the dining out example from before, it’s less about the meal and more about the social connection it can bring.

4. Where to cut costs

While sales and promotions mean less revenue overall, they can also mean more customers. A cheaper price might be the thing that convinces customers to invest right now. Try to avoid endless sales and promotions as this shows consumers that if they wait, a better price will always come. Instead, focus on flash sales or offer payment plans/AfterPay services that help them make fast decisions to invest.

Try to avoid cutting costs on the quality or creativity in your campaigns. Your customers are likely to notice, and they may worry about the overall quality of your product or service. This could be disastrous at a time when they’re seeking durable investments.

5. Plan for the long-term

The financial benefits to marketing are not always straightforward and they don’t always come straight away. Research has shown that some marketing measures can influence customers up to 5 years later – that’s the power of brand awareness. While it might be difficult to invest right now, it’s going to help your business in the long run. It’s also going to provide a sense of business stability to customers which helps them see the long-term viability of your brand. If you can maintain customers during an economic downturn, you may just maintain them for life.

Partnering with SMBs for over a decade

Our mission at Webcentral has always been helping small and medium businesses on their journey to growth. We focus on personalised strategies that take into consideration your unique business goals, budget and brand voice. With expert teams in SEOPPCSocialWebsites and Content – we can help you build an online presence on any of the most popular channels.

During these uncertain times, we’re committed to finding creative solutions for both new and existing client’s. If you’re an existing client, please contact your account manager directly for assistance. If you’re brand new and want to discuss digital marketing options; call us on 1300 663 995 or submit a message online.


Harvard Business Review, published 2008:

Harvard Business Review, published 2009:

Journal of Direct, Data and Digital Marketing Practice, published 2010

International Journal of Business and Social Science, published 2015

Forbes, published 2019:


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