Digital marketing: should you advertise during an economic crisis?

We can no longer ignore it: it seems that companies are going to go through a recession. How long it will last and what impact it will have, remains to be seen. However, we do see that Belgian companies have felt the impact of rising energy costs. Add to that the inflation costs on the wages of employees, as well as the decreasing purchasing power, and 1 + 1 = 2. Companies are going to cut costs. And unfortunately, marketing and communication budgets are usually the first ones on the chopping block. 

Short summary for the quick reader:

  • Despite uncertain economic times, many young entrepreneurs are taking the leap
  • Continuing to invest during uncertain economic times has a positive long-term effect
  • Your market share can increase when fewer competitors advertise

Impact on the Belgian economy

The Belgian economy has faced many challenges since 2020. Despite the significant impact of the Coronavirus, numerous entrepreneurs, including young ones, have still started their own businesses. However, the uncertain economic climate is causing many companies to cut back. It’s a logical fist step to analyse current costs, but unfortunately, digital marketing is usually one of the first areas where the budgets are cut. After all, advertising and investing during an economic crisis is not a good idea, right?

Negative repercussions of cutting marketing investments

While cutting marketing budget and investments during an economic downturn may seem like a reasonable choice, it can lead to unintended and unfavorable results. History has taught us valuable lessons from past economic crises. Those businesses that reduced their marketing budgets and investments experienced an adverse outcome.

Why continuously investing in marketing efforts is beneficial:

  • Your impact increases when you continue to invest: when competitors and peers save on their marketing budget, the competitiveness in the market decreases, allowing you to get more for your budget.
  • Due to the reduced competition on online platforms, the demand for advertising space decreases, and the cost per click often drops, or there is more room to achieve greater visibility with the same or lower investment.
  • Take advantage of this time to reevaluate your entire marketing strategy. Identify which aspects of your plan yield a good return on investment, and which are not as effective but still require a significant amount of effort. Evaluate opportunities to optimize both your short-term and long-term marketing efforts.
  • You remain top of mind – and this impact should not be underestimated. Companies that continue to invest during economic crises are also rewarded in the long term.
  • With others cutting back, there will be less competition, allowing your company to stand out and be more noticeable.

Great recession 2008-2009 – research results*

During the 2008-2009 economic crisis, advertising spending decreased by 27%.

Research provides different insights:

  • 54% of companies that stayed on course and did not cut their marketing budget saw an improvement in their ROI;
  • 60% of marketers who increased their spending realized a better ROI (in%);
  • 52% of companies that did not cut their marketing budget saw an upward ROI trend over a two-year period.

*Source: Analytic Partners, 2022

Declining purchasing power

As outlined in the intro, Belgians also lost some of their purchasing power. This means that expensive purchases are often postponed or daily purchases are made based on price (instead of brand loyalty). It is therefore very important to make it clear to consumers that your company is stable and remains present (or tries to stay top of mind).

Exercise: what is your current market share? What is your current Share of voice? When you continue to invest during a downward economic spiral, it is important to keep track of these KPIs. Research shows that your market share and share of voice increase when you continue to advertise and invest.

Share of voice (SOV) is a marketing metric that measures the proportion of a specific market or conversation that is dedicated to a particular brand, product or company. It is expressed as a percentage and is used to assess a brand’s presence and impact in a particular market or industry compared to its competitors. SOV provides insight into the level of brand recognition, awareness, and relevance in a given market, and helps marketers allocate their resources and measure the effectiveness of their advertising and marketing efforts.

Our conclusion: continue to invest and advertise…

… in a smart and scalable way. Revisit your 2023-2024 marketing plan with a critical eye, and optimize/scale as needed. When your marketing efforts are measurable, you can’t make a bad investment.

Don’t know where to start? Book a free 30 minute strategic session to get you started.