Marketing in a Recession

The government has finally announced that we are in a recession a year after it started. Of course this comes as no surprise to most of us. Spending on Christmas gifts will be down this year as it should be. It sure doesn’t make sense to spend money on gifts that you may need to live on to get through this next year or however long this recession is going to last.

Consumers and businesses are cutting unnecessary expenses. Many businesses are looking hard at marketing expenses. Many are choosing to make drastic cuts here. Is this the best strategy? Are they shooting themselves in the foot?

A company looks hard at last month’s income statement and sees that sales are down 5% and utility expenses are up 10% from the same month last year. They expect sales and utility expenses to stay at these levels for the next year. They try to determine what they can cut out of their budget to reduce their expenses. They look at their marketing budget at 10% of sales and a light bulb goes off. - cut marketing expenses 5% and it can cover the loss of sales. Well will it? Do they know how much of their sales are generated by their marketing efforts? A lot of companies can’t and don’t really measure this. They increase their marketing budgets in good times and reduce them in bad times. Does this make sense though?

You would think that it would be more important to increase your marketing budget during bad times to try and pull in more business. Even if you have to reduce your margins you are still bringing in the sales dollars to help cover your expenses. Reducing marketing expenses can result in more of a decline in sales. Companies may need to spend the same amount in marketing or increase marketing expenses to keep sales at their current level.

It is important to track the results of marketing efforts closely during a recession to determine what marketing vehicles are producing the results you need. Pay per click advertising during a downturn in the economy is very attractive. It is the most affordable marketing available and the results are easily tracked. You can review your results at any time and change your campaigns quickly.

Companies should continue their marketing efforts during a recession and view it as an opportunity to gain more market share while many of their competitors cut back. Online marketing is an affordable alternative and can be very effective if managed properly.

Lynn Jebbia is a Senior Project Manager at ArteWorks SEO, search engine marketing company. Her focus is SEO Strategy, Keyword Analysis, Competitive Analysis, Web Site Audits, Pay Per Click Management and Client Account Management.