Five Actions to Recession-Proof Your Marketing Strategy

While the pandemic lingers, macroeconomic factors are beginning to dominate the C-Suite agenda. Inflation is at its highest level in 40 years with a potential recession looming, so business leaders are resorting to standard management strategies for volatility.?These strategies emphasize damage mitigation, risk aversion, and survival, and unlike the response to the pandemic, they have been tested over decades.?But there’s a big downside: hitting the panic button and resorting to standard cost-cutting policies – what everyone else is doing – won’t yield the best results.

For marketers, this playbook is nothing new. During the Great Recession of 2007-09, U.S. companies slashed ad spending by 13%. The theory makes sense – as consumers reduce spending, advertising products they won’t buy seems futile. With declining sales, businesses have to make up for lost revenue somewhere. Because marketing costs can usually be trimmed quickly and don’t require mass layoffs, these become an easy target. Still, while managing discretionary costs is wise, the assumption that most of the marketing budget falls into this cyclical category is mistaken.

In our highly digital world of 2022, dusting off the discretionary spend playbook of 2007 makes little sense. Back then, Facebook was still in its infancy and the first iPhone had launched in January. Now with hyper-targeted campaigns, pervasive eCommerce, proliferating customer data, and sophisticated measurement tools, marketers can now rewrite the rules for engaging audiences in a downturn.

Business leaders will be navigating choppy waters, and those with cashflo concerns need to be particularly bold and decisive. In a downturn, marketers who make smart, strategically aligned decisions will excel when the dust settles. The Great Recession strengthened many resilient companies—those that could absorb stress, recover critical functions, and thrive in altered circumstances. With more control, flexibility, and precision than ever, resilient marketers can invest in personalization and smart allocation to create a competitive advantage. The pandemic, a volatile economic environment, and ever-evolving consumer behavior have cleared the way for a new playbook to emerge for resilient marketing in a downturn.

Here are five key actions for marketers:

1.????Maintain—or increase—your marketing budget

When the economy takes a hit, most of your customers will suffer, and you may see sales dip. But a kneejerk reaction to reduce marketing spend is counterintuitive.?Starving the upper funnel today will make it much more challenging to grow next year. Also, marketers who maintain spending while rivals cut back will have a lot less noise getting in the way of their messaging. When competitors fall silent, the path to current and potential customers clears up, with media costs often discounted to boot.?And if you push incremental testing to validate media efficiency, you’ll generate quick insights into where additional spend makes sense. Patience is key as brand switchers tend to have a longer buying cycle.

2.????Quickly adjust to new customer behaviors and target new audiences

Access to consumer data and insights has never been greater.?These provide a roadmap for spending in key markets -- especially which consumer segments to double down on, and how to prioritize the product mix. Consumers do naturally become more price-sensitive in a downturn, but that in turn makes them more open to changing from their preferred brands.?You’ll have an opportunity to convert previously out-of-reach consumers. A nuanced understanding of what really drives consumer choice can yield dividends in a downturn.?Marketers who use customer insights and first-party data to reallocate budgets and redefine target demand spaces, will come out ahead.?

3.????Focus on retaining existing customers

While previously out-of-reach consumers may now convert, your own loyal customers are also up for grabs. While smartly engaging with potential new customers, your main attention must go to retaining and growing existing customer relationships.?Those ties can keep an organization afloat in a downturn. Just be careful with promotional messaging—you might encourage price-sensitive customers to compare your rivals’ deals. Instead, focus on core consumer needs that drive choice, such as comfort, availability, and ease, and save the promotions for new customer acquisition. Where possible, use personalized campaigns to drive value without paid media spend.

4.????Rigorously measure campaigns

Leading firms emphasize marketing ROI as a key enabler for the company’s long-term vision. Proving marketing’s value has long been a tricky endeavor, but thanks to recent developments in AI, marketers have much stronger analytical capabilities now. Building the right analytical tools and decision-making processes will allow for better spend allocation across the brand and market portfolio.?You’ll put more resources into the right channels.

Marketers can deploy a test-and-learn approach to scale campaigns into larger investments and abandon ones that lack value. Use modeling and experiments to measure ROI, lifetime value (LTV), customer acquisition cost (CAC), and average order value (AOV).?Don’t focus on costs—look at how your top line changes. ?Watch your share of voice, share of wallet, and share of growth—and compare these metrics to peers. These relative measures will complement absolute numbers, so you can compare to other swimmers in the same water. We’ve found that the best marketers unlock 20%-40% of financial improvement with effective marketing measurement. As budgets tighten in a downturn, these gains become critical.??

5.????Project confidence and stay consistent—internally and externally

A welcome side effect of maintaining marketing spend is the veneer of stability in times of crisis – which signals to customers and employees that the business is healthy and resilient. As consumers drop brand loyalty for factors such as convenience, brands that demonstrate stability will reassure buyers about their ongoing quality service.?Firms must remain consistent in their name, branding, marketing, and customer interactions to project confidence.

Done right, consistency becomes a force multiplier as it can also help retain top talent. While we’ve focused on external outcomes, internal confidence and consistency are also critical. In a downturn, firms should aim to maintain internal agility and promote cross-functional teaming, ensuring the marketing organization is clear on its mandate and well supported.?

For more insights on how the macroeconomic environment may impact the US ad markets, check out the recent BCG article?Can the US Ad Market Survive the Economic Headwinds?

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About the Authors

David Ratajczak?is a Managing Director & Senior Partner based in BCG's Atlanta office.?Lauren Taylor?is a Managing Director & Partner based in Dallas.?Shelby Senzer is a Managing Director & Partner based in Atlanta. Jeff Hill is a Managing Director & Senior Partner based in Los Angeles. Rob Derow is a Managing Director & Partner at BCG Digital Ventures based in Manhattan Beach. Ray Yu is a Managing Director & Partner based in Atlanta. Peter Dewey is a Managing Director & Partner based in Atlanta. Siwei He is a Project Leader based in Atlanta. Carolyn Zwiener Stortz is a Global Marketing Knowledge Expert based in Chicago. Meredith Finnerty is a Marketing Lead Knowledge Analyst based in Boston.