Marketing During Down Times
by Chad Rueffert

Recessions mean different things to different marketers.  It’s debatable whether the United States and Colorado in specific have truly been experiencing a recession over the last two years or have merely had the perception of one because business is slower than it was during the boom times of the late 90s.

Either way, it seems to be an accepted truth that companies spend less money on marketing and advertising during the down times.  But it’s a truth based more on expectation than reality. 

Take the homebuilding and real estate industries as an example.  In order to stimulate the supposedly sluggish economy, the Federal Reserve Board has consistently decreased lending rates over the last few years.  Despite the doom and gloom forecasts for the economy, homebuilders, real estate agents and mortgage lenders have all increased their advertising budgets to take advantage of the opportunity.  Those that began marketing early in the process were by far the most successful.  The reality is that mild recessions usually only affect certain industries, specific types of products and services, and selective areas of the state and country.  In this specific case, much of our mild recession was caused by the terrorist attacks, and the negative effects were somewhat limited to industries sensitive to the threat of terrorism. 

There is also a growing group of smart-minded companies who have learned that recessions are an excellent time to build market share.  In hard times, businesses that aren’t competitive often disappoint customers or even close their doors.  This opens the door for other companies to step in and build their own business with the new pool of available customers.  To do this, however, it is necessary to advertise during these hard times to ensure when your competition does falter, you are there to offer an available alternative. 

It has traditionally held true that the first part of a company’s budget to get cut in hard times is advertising and marketing.  But the companies who are most successful will tell you the opposite path is the one to success.  When consumers have less money to spend, they become far more conscious of the money they do have.  They comparison shop, they watch for sales and they become a much harder sale.  When consumer expectations and behaviors shift smart companies change their marketing strategies to take advantage of the new buying habits.  And they understand that in a more competitive market, you have to fight harder for the business.  Companies who cut their marketing budgets during this time aren’t fighting harder, they are giving up.  They may improve their bottom line in the short run.  But when times get good again, they’ll find things just not as good as they were before because of the lost market share to the more aggressive competitors.

Over the last couple years there may very well have been a downward trend in the amount of money spent on marketing and advertising.  But businesses, especially small businesses, should react to recessions in much the same way consumers do:  they should comparison shop, they should watch for sales, and they should become more conscious of the money they do have.  What they shouldn’t do is think in the short term and kill off their marketing budget every time there is a dip in sales.  If you stop trying to sell because sales are slow you’ve created a self-fulfilling prophecy.  All markets are cyclical and will experience up and down times.  Planning for the long run is the only way to be sure you make it through both the good and bad times.  When the recessions come, use it as a great excuse to analyze your marketing budget, trim away the tactics that aren’t working, and identify the ways you can use your short-sighted competitor’s decision to cut their marketing budget to your own advantage!