Customer Experience News & Trends

Recession marketing: Does it really pay to resist cutbacks?

Have you heard this one before: “Companies that don’t cut back on marketing during a recession come out ahead of the competition”?

Christian Shea, principal of marketing agency, has — and he hears it repeated at every conference and networking event he attends.

“But here’s the thing,” he says, “I have yet to hear the name of a researcher or report related to those findings.”

So he decided to call every speaker’s bluff and do a little digging.

What the research says

The authors of a 2005 study, “Turning adversity into advantage: Does proactive marketing during a recession pay off?” found that actively marketing in a down economy does produce positive results.

However, they caution, this does not apply across the board.

Example: Consumer brands like Dell and Wal-Mart are so bound to marketing that big cuts would hurt their bottom line beyond the recession’s impact.

But b2b companies usually won’t feel the hit of a marketing reduction as badly, because typically, marketing is one of many components that generate revenue.

The most referenced study, one by McGraw-Hill about the 1981-1982 recession, concludes that b2b companies that increased marketing during the recession averaged much higher sales growth for the following three years than those that decreased marketing.

But all that’s really saying is that to maintain market share, it’s necessary to keep pace with what your competitors are doing.

What marketers can do

The battle cry therefore is: Become smarter with what you have.

If budget restraints are a factor, Shea’s research suggests, you should consider working with only the channels that you can continually improve as initial results are analyzed.

“If you can do only enough of a campaign to pull one round of data from each communication channel,” Shea says, “go with fewer channels that will have the greatest impact.”

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