We know times are tough currently with New Zealand officially entering recession. While recessions may present daunting challenges, they also create opportunities for businesses to differentiate themselves, connect with customers, and secure a stronger position in the market. So, most businesses may consider this as a time to trim down on their marketing budget. However, now is the time to invest in marketing as a strategy for long-term growth for your business.Research has shown that companies cut down on their marketing by as much as 20% during tough times! We often see companies following an unwritten rule: if they’re strapped for cash, they’ll stop investing in areas, such as marketing, that don’t generate an obvious return on investment.
We believe these marketing cutbacks are shortsighted. During times of economic uncertainty, marketing is more important than ever. By eliminating inefficient spend and reinvesting it in high-growth areas such as marketing, resilient marketers will weather pending storms while also creating opportunities to rebound stronger. It’s not just us at Grow NZ Business who believe this, check our what global business experts, McKinsey & Company, have to say:
One of the main reasons for businesses to cut down on marketing is because they believe that consumers don’t want to spend in tough or uncertain times, but, in fact, research shows that despite the current macroeconomic uncertainty, consumer resiliency is still strong. Companies should leverage this and reinvest their dollars more strategically. This means that cutting back where you are currently overspending but also investing more where there’s greater potential for longer-term ROI. We think successful companies could find savings of 10 to 20 percent by eliminating inefficient spend. If you then reinvest those savings in more efficient efforts and targeted campaigns to drive 5 to 10 percent growth, there is potential to create distance from the competition and rise on top.
Here are a few key reasons why marketing is essential during a recession:
- Maintaining visibility and brand awareness: During an economic downturn, consumers tend to become more cautious with their spending. By maintaining a strong marketing presence, you can keep your brand visible and top-of-mind for customers. This ensures that when they are ready to make purchasing decisions, your business is at the forefront of their minds.
- Building customer loyalty: A recession can be an opportune time to strengthen relationships with existing customers. By implementing targeted marketing campaigns, personalised messaging, and exceptional customer service, you can nurture customer loyalty and foster long-term relationships.
- Capitalising on market opportunities: Recessions often lead to shifts in consumer behaviour and preferences. Through effective marketing strategies, you can identify and capitalise on emerging market opportunities. One strategy is ‘full-funnel marketing’ which looks at marketing performance across the entirety of the funnel to capture existing demand and create new demand tied to both brand outcomes and commercial outcomes. Knowing what informs and inspires their audience will allow marketers to make more effective decisions about which channels are performing and how to allocate budget accordingly.
- Gaining a competitive advantage: During recessions, some businesses may reduce or altogether halt their marketing efforts, creating a void in the market. By maintaining a strategic marketing presence, you can seize this opportunity to gain a competitive edge.
- Maximising ROI: While it’s natural to be more cautious with budgets during a recession, marketing should not be overlooked or underestimated. In fact, investing in targeted marketing initiatives can yield a high return on investment. By analysing data, optimising campaigns, and focusing on cost-effective strategies, you can make the most of your marketing budget and achieve tangible results.
One of the channels that is often under-utilised by businesses is Microsoft Advertising. As the Winner of the 2022 Microsoft Advertising Celebrated Partner Award For New Zealand and Australia, Grow NZ Business is here to help you gain success through Microsoft Advertising.
If you would like to explore tailored marketing strategies or discuss how our team can support your business during these challenging times, please don’t hesitate to reach out. We are here to assist you in navigating through this recession and positioning your business for long-term success.