A recession is looming in the UK, and not just because at the beginning of this year the US National Bureau of Economic Research declared that the US had officially entered an economic recession.

 

According to a VAB report based on metrics from Dentsu, GroupM, Magna, and Zenith, 2022 ad spend growth in the U.S. has decelerated from 20% in 2021 to 12% and may slow down to 5% in 2023.

 

The World Bank has already raised the alarm about the recession that is going to occur in 2023. And with a recession comes uncertainty for your clients and for your own digital marketing agency.

 

But understanding how a recession affects digital advertising and your clients’ businesses will help you not just survive but thrive in one. But how your digital marketing agency can grow during a recession is unclear.

 

Because being the best prepared and most resilient agency means that you’ll be the ones coming out the other side, ready to take advantage of the economic boom.

 

Well, this will be the downturn of the economy and affect several businesses and their potential customers. Yet, to survive in a recession, your business will need cash flow. Therefore, you need to convince your customers to buy your products. So, you need to focus more on revamping your marketing strategy as per the current situation. Hence, many businesses are shifting their attention to digital marketing.

 

The major reason that digital marketing could be hit hard during the recession is its cost-effective nature. 

 

Digital marketing costs less than traditional advertising because it doesn’t rely on print or broadcast media. You only pay for what you need, which means there are no wasted ads or expensive unused inventory sitting around. Digital advertising also allows you to track how effective your ads are so that you can make adjustments as needed.

 

How exactly will a recession affect the digital industry? For your better understanding 

 

With a recession comes a reduction in consumer spending. This in turn leads to a reduction in spending by brands and clients on advertising efforts. After all, spending on advertising is an easy way to cut costs and recoup some of these losses in the short term.

 

At the height of COVID lockdowns, the digital marketers who adapted the tones of their advertisements were the ones who experienced new customer growth for their clients.

 

When consumer wallets tighten for a lot of brands, the first instinct is to reduce ad spend and reduce risk. which is where you come in. Because the best course of action for brands isn’t to reduce ad spending but to change their advertising strategy and target goals. It’s your job to help clients understand that while a recession offers its own challenges, there are also opportunities.

 

During a recession, hiring efforts are usually the first thing to go. It’s a knee-jerk reaction by managers and senior members of staff. But reducing your hiring efforts can have long-term detrimental effects on your business.

 

A recession is scary, but it doesn’t have to be the end of your business. Hope remains since everyone still needs to spend in order to live. This means the money is still there; you just need to adjust your strategies to look in the right places to find it.

 

Digital marketing is a great business tool, and not only as a means to grow and expand. You can repurpose it to combat a downturn as well. 

 

Rather, based on data from the most recent major economic recessions, including studies by the IPA in their Advertising in a Downturn publication as well as those by McKinsey & Company (paywall), Pennsylvania State University, and VAB, all say that brands should keep on advertising. The higher the marketing share of your brand and voice, the bigger the market share is going to be. That means that cutting marketing budgets during a recession, despite providing temporary financial relief, can bring about a significant decline in the mid-to-long term.

 

Since the dawn of the digital age, businesses and organisations have been sceptical about the Internet. In 1998, American economist Paul Krugman said Internet growth would “slow dramatically” and compared it to the fax machine.

 

It’s safe to say Krugman’s prediction didn’t age well.

 

The Internet prevailed, and despite any trepidations, brands have consistently and increasingly decided to invest time, money, and resources into their online efforts, especially digital marketing.

 

Sorry, fax machines.

 

In fact, it’s strange to imagine a company that doesn’t have a digital presence of some kind these days. The Internet has been instrumental in giving rise to some of the largest companies in human history, including Google, Amazon, Apple, etc.

 

The point is, when a business executes an online strategy well, nothing can hold it back—not even a recession.

 

If there is such a thing as recession-proof marketing, it most likely involves a multi-channel approach that focuses on very new shopping behaviours.

 

Marketing methods like search engine optimization (SEO), pay-per-click advertising (PPC), and social media marketing can prove beneficial.

 

The question is, is your brand ready for the next economic downturn?

Because whether you’re ready or not, it’s coming.



One Response

  1. Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me?

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