Why Companies Shouldn’t Cut Marketing Budgets in a Recession

Why Companies Shouldn't Cut Marketing Budgets in a Recession Preview Image
Focus on what’s working, know your customer, and nurture your loyal customers so your brand is well-positioned to outlast negative economic situations.

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Focus on what’s working, know your customer, and nurture your loyal customers so your brand is well-positioned to outlast negative economic situations.

When taking a look at your marketing campaigns, conversations usually surround areas that can be easily controlled. How can we adjust our target audience? Which types of creative assets should we test? What is the best CTA to use for this ad?  The details matter and that is where so much time is spent to make sure campaigns perform effectively and efficiently. It is important to remember that there are some things that brands and their marketing teams can’t control, for example, the economy.   

Right now inflation is high, interest rates are rising, unemployment is low but rising, and there is fear that the United States is either already in a recession or is poised to enter one. All of this creates a lot of uncertainty and has led many business leaders to ask “should I change my marketing strategy in response to this economic situation? Should I cut back my marketing budget? Should I pause paid ads for now?” 

First Of All, Don’t Panic  

This is easier said than done, but making too many drastic changes too quickly (as a result of a looming recession or not) will negatively impact your business. That’s not to say you shouldn’t be open to exploring changes – you should always be open to testing new ideas and learning from them. However, making big decisions like stopping all marketing efforts is not the right move.  

In times of economic uncertainty, it’s easy to look at your monthly P&L, see the outflow of cash that is being spent on advertising, and say this is an easy way for us to save money so let’s cut here and preserve cash. Many companies hit the panic button and cut marketing dollars immediately. We recommend looking at this as an opportunity because some of your competitors will hit that panic button and if you don’t cut your spend, you are now advertising in a less saturated space with fewer ads to compete with.  

Focus On What IS Working 

Completely cutting ad spend and marketing efforts may help preserve cash, but what has been driving your revenue? Likely a large portion of your revenue has been coming in as a result of your marketing efforts. If it wasn’t, these marketing campaigns likely would’ve ended long ago (we hope). You have to spend money to make money. So, if you fully cut your ad spend, your revenue is also going to decline and you’ll hit a plateau.  

Instead, use this important time to evaluate all of your campaigns and platforms and narrow your focus to your top performers. Your “always on” ad campaigns should remain running. If your email campaigns have been performing well, for example, determine if there are ways to level up this strategy and shift your marketing spend here.  

If you are dead set on cutting your budget, take a look at your experimental channels and some of your upcoming test concepts. You don’t have to cut them out entirely, but since you’re not sure how they’ll perform you can trim the budget there until you better understand your return on ad spend (ROAS).  

Know Your Customer 

Different industries are going to be impacted differently by what is happening in the economy. This is why it is so important to know who your customer is and how your product fits into their life. Is it essential? Will a change in the economy cause a change in demand for your product or service? Is it a luxury? Is it something customers are likely to be willing to cut out of their lives or something they can’t live without?  

At the end of the day, changes in the economy are going to impact people very differently on an individual basis. You know your customer best and know what will impact their decision-making. For example, maybe you offer a luxury product but your customers are high-earners and will feel the impact of inflation less on a day-to-day basis. Maybe your customer isn’t a high earner, but what you sell is an essential or important part of their lives. These are the important questions to be considering now.  

Customer Loyalty  

You still need to focus on marketing to attract new customers and bring them into the sales funnel, but you also want to make sure that you are nurturing and appreciating your current customers. Focusing on customer loyalty will help maintain revenue, and if you do not have a loyalty program for your brand yet, now is the perfect time to launch one. Thank the people who have helped your brand get where it is now to make sure they stick with you through tough times and help you continue to grow.  

Seriously, Don’t Panic  

Reiterating this point again because it’s easier said than done. Right now, every podcast you listen to or article you read gives you advice to go in 1 of 100 different directions, often contradicting one another. Always keep in mind, they don’t know your business and they don’t know your customer. You do. By focusing on what is working, knowing your customer, and nurturing your loyal customers, you are well-positioned to make the changes necessary right now and ensure your brand outlasts current economic situations.  

If you are close to hitting that panic button and you need help determining where your marketing dollars can be the most impactful, reach out to our team today and we’d be happy to nudge you in the right direction! 


About BuzzShift 

BuzzShift is a digital growth strategy agency with a focus on mid-market, scaling, purpose-driven DTC Brands. By combining the ideologies of branding, performance marketing, and retention agency, we are able to create memorable experiences with measurable results, and build long-term success for our clients with scalable, sustainable growth. Learn more about BuzzShift. 

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