As the cost of living continues to increase, concerns regarding inflation and sluggish economic growth are on the rise. Marketing is instrumental to business success, however in an age-old debate, marketing budgets are often the first to be cut in a time of reduced spending. That’s why marketers are now under more pressure than ever to work their budgets as hard as possible.
According to Marketing Week, just under six in 10 small businesses will freeze or cut their marketing spend in 2023, with just 10% expected to increase their marketing spend. During times of economic uncertainty, customers spend less and revenues decrease, so many companies see investing in marketing as counterintuitive, but the reality is that marketing is more essential than ever.
The good news is that an increase in measurement tools allows the true value of marketing to be seen, and the ability to provide return on investment on every single pound spent, so no money is wasted.
The cost of decreasing marketing spend
According to research by Millward Brown, brands that ceased advertising during the 2008 economic downturn experienced a decline in brand use by 34% and brand image by 28%. In contrast, companies that increased their advertising spending during the recession saw an average growth in market share of 2.5%.
Marks & Spencer is an example of a company that reduced its advertising spend by around 30% during the 2008 recession, and as a result, reported a significant decline in profits later that year (up to 30%). In light of this, businesses may benefit from rethinking their marketing strategies during an economic downturn to ensure they maintain brand visibility and stay competitive.
Why marketing is essential, even during an economic downturn
Marketing is essential for businesses even during an economic downturn for several reasons.
Maintains a loyal customer base
Marketing keeps customers informed and engaged, which is essential for maintaining a loyal customer base. In times of economic uncertainty, customers may be more cautious about their spending, making them less likely to try new brands which is why marketing efforts often shift from acquiring new customers and retention becomes key.
On average, acquiring a new customer costs five times more than retaining an existing one. It makes complete financial sense for companies to focus their marketing efforts on increasing brand loyalty and engagement so that they can retain their customers and increase their lifetime value.
Increases market share
Marketing can increase market share and position a brand for growth. While most companies are cutting their budgets during economic downturn, this creates less “noise” in the market, allowing for lower costs per lead.
This means that businesses that continue to market themselves have the potential to increase their market share and position themselves for growth when the economy recovers.
Customers are more likely to look to brands that they trust during times of uncertainty, and a continued marketing presence communicates strength and stability to customers, thus building trust and establishing a strong reputation.
Advantages of integrated marketing communication
During tough economic times, integrated marketing communications can be a powerful tool to maximise your marketing efforts while keeping costs under control.
Increasing customers trust
A consistent brand message and style across marketing channels helps to build trust as consistency means customers are more likely to trust that your brand is reliable and dependable.
This in turn maximises market impact by helping to carve out your individual brand and keep your business visible during challenging periods.
Integrated marketing can also be cost-effective by reducing the amount of labour required to manage multiple channels.
This, in turn, saves time, allowing you to create higher-quality content and boost visibility. Ultimately, an integrated approach can maximise ROI by sending united messages instead of uncoordinated, one-off messages.
Aligning all aspects of your marketing, including PR, social media, brand identity, and direct marketing, to work towards a common goal can lead to improved results, by providing clear direction, maximising resources, increasing efficiency, and boosting return on investment.
This will prevent your marketing efforts from coming off as chaotic to customers and can improve results, whatever your marketing goals.
Identifies underperforming areas
Working with an integrated approach to marketing allows you to analyse your work and identify any problem areas, which gives you the opportunity to remove any unnecessary costs and cut budgets where required.
Only essential channels and content remains, and your marketing strategy becomes more focused and efficient. Overall, integrated marketing communications can be a key strategy to help your business navigate through tough economic times.
Whatever your marketing goals, integrated communications is the most effective way to keep hold of budgets and resonate with your target audience, whether your goal is to acquire new customers or maintain brand loyalty.
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