The cost of living crisis in the UK is getting worse by the day, with millions of people across the country feeling the effects of the shrinking economy. In response to this, many businesses will look for ways to cut costs and save money.
Unfortunately, marketing and PR are often the first aspects of a brand to take the hit and lose part, if not all of, the funding. However, in many instances, this is not the ideal solution. Here are 5 reasons why trimming your marketing budget could have negative, long-term effects.
Marketing is more important than ever
Businesses cutting their marketing budget during uncertain economic times may think they’ve saved money on an expendable aspect, however, this simply isn’t the case. Consumers still need to purchase products and services during a recession, it’s just more likely that they need to be careful about how they spend their money.
With consumers becoming more aware of their expenses and spending habits, the challenge as a brand is to convince the consumer that your product or service is a necessity, rather than a luxury. The best way to do this is through marketing and PR, which obviously becomes much more difficult if the budget has been reduced or removed entirely.
Stay ahead of competitors
With businesses all over the country looking for ways to cut costs, many may decide to scrimp on their marketing budgets. Brands that don’t cut their funding for marketing and PR will therefore have the upper hand on any that did; fewer brands marketing their products and services means less competition for those who continue their marketing efforts. The reduced competition results in lower PPC rates, as well as an overall increase in impressions and engagement. A cheaper cost for better results; you’d be a fool to miss out on that!
It’s important to note that Google’s algorithm isn’t affected by the state of the economy, meaning that in a time of reduced purchasing, Google is still searching for fresh and relevant content. With fewer competitors fighting for Google’s top spot, a recession is a perfect time to scale up your content production and work towards the top rankings on the search results page.
Show your consumers their worth
During a recession, not only are your consumers lacking expendable cash but your business is as well. Client retention is essential for any company, especially through a time of financial hardship.
Regular communication with your consumer base helps build your relationship with them, even if they aren’t making a purchase – just because they can’t afford to shell out money on your products or services, doesn’t mean they’ve lost all interest in your brand. By continuing to market your brand’s message and values, you can ensure that your consumer base is experiencing the genuine interest and care that they’d receive under usual financial circumstances. When the country begins its eventual transition out of recession, you want your consumers to immediately have your brand’s name at the forefront of their minds.
Futureproof your marketing strategy
It’s easy to assume that things will return to ‘normal’ once a recession is over, but realistically, the after-effects of a recession can impact consumer purchasing patterns long after the financial crisis is resolved. If you do decide to cut marketing budgets throughout this period of financial uncertainty, there will be a day when you deem the economy suitable to begin funding this aspect of your business again. However, your existing marketing strategy may not be suitable for the new market trends.
Continuing your marketing efforts throughout periods of financial hardship allows you to modify the strategy accordingly, giving your consumers exactly what they need throughout the entire process. Rather than rushing to create a new and effective strategy at the last minute, brands can benefit from working with the recession, moulding their marketing strategy in real-time. The results will most likely be an entirely new strategy in comparison to before the recession, but this is to be expected in line with new consumer purchasing trends.
Learn from history
Still not convinced of the benefits of continuing your marketing efforts throughout periods of financial hardship? In the past 100 years, there have been multiple periods of recession and financial crisis, however, this has allowed us to learn the best way to tackle these situations from a business perspective.
Marketers have studied the recession of 1920/21. The findings showed that companies that kept investing in marketing continued to grow their sales once the economy picked back up, whereas competitors that cut their budgets saw sales decline for the next 3 years (on average).
Similar research into the 2007/08 credit crunch found that businesses that reduced their marketing budgets did actually perform better throughout the duration of the crisis. However, once the economic crisis had passed, their revenue began to fall. Comparably, companies who had continued their marketing efforts throughout the crisis performed much better in the period following the recession.
This research strongly backs up how a short-term save on marketing costs can have a long-term, negative effect on your business.
Gain support if you need it
Uncertain financial times are extremely difficult for businesses of any size. If you’re unsure of how to handle your marketing efforts during this time of hardship, contact us today.