How can brands defy recession? By increasing marketing budgets
For The Drum's Predictions Deep Dive, Nathan Ulery of B2B shop The Mx Group makes a firm case for spending through a recession – on brand building, customer retention, digital transformation, and talent.
In a recession, you may be tempted to cut spend. The Mx Group's Nathan Ulery argues that you should do the opposite. / Ibrahim Rifath via Unsplash
In 2023, the looming recession hangs heavy in the air while departments analyze row after row of resources, projects, talent, business development initiatives, and future campaigns.
The knee-jerk reaction for any chief financial officer prepping for economic disruption is to find the line item under ‘marketing’ and start cutting from there. But as chief operating officer at my agency, I decided to not let fear of uncertainty guide our organization. I gave the directive to increase our marketing budget for 2023. I believe that by harnessing the power of marketing and allocating that increased spending wisely, brands will defy the recession.
Making marketing a priority during a recession
One needn’t search far to find data showing how much better brands that increased their marketing spend during a recession fare compared with those brands that cut back or eliminate it. An Analytic Partners report found that 60% of brands that increased media spend in the last recession saw a greater return on investment; those that spent more on paid advertising saw a 17% increase in incremental sales.
With competitors making cuts, the marketing environment shifts, offering more real estate for advertising. Brands can leverage the availability and lower ad costs to increase awareness. Maintaining your share of voice in the marketplace is much easier (and cheaper) than trying to earn it back. Take it from the marketers at Reckitt Benckiser, which launched a campaign amid the 2008 recession. “Reckitt Benckiser actually grew revenues by 8% and profits by 14%, when most of its rivals were reporting profit declines of 10% or more. They viewed advertising as an investment rather than an expense.”
But it’s not enough to simply increase (or maintain) a marketing budget during a recession. Brands must look to use that marketing spend wisely and allocate it to programs that will drive results. Here are four areas that will prove ROI.
1. Brand building
This is especially important in the B2B world. There has never been a better time to create and celebrate a brand purpose. Usually, a field that was dominated by B2C brands like Apple, last year’s FutureBrand Index (an annual perception study of PwC’s Top 100 companies based on brand perception) ranked four B2B brands in its top five. Maintaining a focus on brand building supports long-term sales through ongoing awareness and perception.
2. Customer retention and loyalty programs
Generating new business leads is always important for the growth of any brand. But customer experience can play a major role in strengthening customer retention – another source of demand through cross-sell and up-sell opportunities. As an added bonus, loyalty programs help increase brand trust and develop reliable customer data.
3. Digital transformation
Recession or none, digital transformation will keep on with its steady (and speedy) growth. To keep pace with B2B buyers’ demands, businesses will need to invest in e-commerce solutions, personalization and strong martech stacks to meet buyers at every step of their journey.
4. Talent acquisition and retention
Finding and keeping talent on board is key to surviving any recession. Marketing can play a major role by using existing marketing channels and strategies to recruit and re-recruit. Businesses need to think about how to best engage with the talent through channels, platforms and messages. Marketing can help create campaigns that attract qualified talent. Once that talent is found, retaining that talent is supported by living the brand values and purpose at every stage of the employee’s journey. Invest in training programs that provide up-skilling and professional development.
Recessions do end. Times can be uncertain, but we’ve weathered recessions before and even navigated a global pandemic. Investing in a brand’s growth for the long term requires an investment in brand awareness and strategic allocation of funds. If done thoughtfully, business leaders can experience a recession as a tailwind, instead of a headwind.
For more takes on the year ahead, by and about marketing agencies, check out our Agencies Predictions hub.
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The Mx Group
The Mx Group is the second largest independent, integrated B2B marketing agency in the U.S. Our mission is to impact the marketplace for companies that impact the world. For over 30 years, we’ve created meaningful end-to-end buying experiences for B2B brands. Our clients are leaders and innovators in energy, utilities, manufacturing, hospitality, automotive, health care, technology and SaaS who rely on our expertise to influence and grow their businesses. Our relationships with our clients and people are why B2B Marketing recognized us as Agency of the Year. Our headquarters are in Chicago, but our reach is global. Whether a client is an established or startup B2B brand, we have the people and perspective to be a strong partner that makes a difference.Find out more