In 2024, the risk of a recession in Australia sharply increased. Inflation remains higher than the Reserve Bank of Australia’s target of 2-3%, and unemployment is on the rise. While we’re not in a recession just yet, it certainly feels like one for the millions of people affected by the cost of living crisis. As a business owner, you may be asking: if consumers can’t afford to spend, what’s the point of marketing in an economic downturn? Although most of us are tightening our belts, the right marketing strategy can still help you grow in both the short and long term. It’s possible to use marketing during a recession to your advantage.
A recession is a long and widespread economic downturn, defined as two consecutive quarters of negative economic output. Australia’s last recession was in 2020 when the Covid-19 pandemic caused a prolonged period of negative growth in the year’s first and second quarters.
Every downturn poses unique challenges as no two recessions are exactly alike. However, there are still some firm strategies that either propel brands forward or send them backward. It’s just a matter of being able to interpret customers’ consumption patterns and adjust your strategies accordingly.
A full-service creative marketing agency, Anchor Digital is skilled in marketing in all kinds of conditions, including digital marketing during a recession. Here are our tips for keeping your brand—and your conversions—strong during this challenging time.
Challenges of Marketing in an Economic Downturn
While a slow economy doesn’t mean the death knell for your marketing efforts, it does present you with some difficulties to overcome. The biggest challenges of marketing in an economic downturn include:
Smarter spending
A recession is a stressful time for a business, no matter how strong your marketing strategy is. It affects your business in many ways, from slower sales to reduced cash flow to stress within your workplace. It’s tempting to make major budget cuts to the marketing department and other crucial areas of the business, but that can do more harm than good in the long run. Instead, your challenge is smarter spending: focusing on investing your budget efficiently rather than slashing anything you can.
Reduced customer spending
During an economic downturn, customers are bound to spend less. In 2024, consumer spending took a dive even among affluent households in Australia, and more than half of all Australians with debt struggled to make repayments. Anxiety about higher interest rates and rising inflation can make even those in a higher income bracket cut down on both essentials and non-essentials and seek out bargains when they can.
Savvy marketers will track changes in consumers’ spending patterns and adjust their strategies accordingly. Focusing on value-driven marketing emphasises what makes your products different in a positive way and demonstrates why they’re still worth buying even when times are tight.
Relying on promotions
While discounts and special deals might help increase your sales, over-relying on these strategies has a couple of downsides. It can come across like you’re conceding your prices were too high to start with, and you may condition customers to only buy from you during a promotion. Rather than lowering your price as your first approach, it’s best to consistently deliver value for money.
Layoffs
Businesses frequently cut costs during tough economic times by laying off staff, which can affect marketing departments and mean fewer workers banding together to achieve results.
Why Focus on Marketing in an Economic Downturn?
You can still market during a recession, and you should. Reasons to continue focusing on your marketing efforts during a time of negative growth include:
Lower advertising costs
An unexpected but positive side effect of downturns is that marketing costs tend to drop. This means that if pay-per-click (PPC) is one of your strategies, you can engage your audience at a lower cost-per-click or cost-per-impression, freeing up the rest of your budget for other areas.
Less competition
During an economic downturn, many businesses are quick to pull or reduce their marketing efforts, leaving space for you to capture a bigger slice of the attention.
Keeping up your momentum
When you’ve spent a lot of time building your online presence and brand authority, pulling the plug at the first sign of financial trouble can undo all your good work. Recessions don’t last forever. Having ongoing campaigns in place and an established presence prepares you to be in a stronger position during the upswing. If you’ve put all your ad campaigns on hold, it can be a lot more expensive and time-consuming trying to pick up where you left off.
People will still buy essentials
Products like food, cleaning products, and other essentials will remain in demand during a recession. The more necessary your product is, the higher the demand for it will stay during a recession. During this time, lower-cost and more generic varieties of products can see an increase in demand as people look for the most affordable option available to meet their needs.
There’s still a demand for at-home entertainment
A night at home is less expensive than a night in the town. Entertainment options like streaming services and video games can see a jump in demand during a recession. Streaming services are both a low-cost way for the public to access entertainment and a source of advertising revenue for brands.
Overcoming the Challenges of Marketing in a Recession
With the right marketing strategies in place, your brand can overcome the challenges of a recession. Our tips for marketing during a recession include the following:
Examine the trends
Review all the available data and use it to track trends in the industry. You’ll see which kinds of products are selling and which aren’t, and where your brand can fill needs in the market.
Stay flexible
There are no guarantees in marketing, and a recession makes things even more uncertain. As always, test and re-test your approach and change course when necessary.
Prioritise value-based content
Value-based marketing emphasises how your products and services can bring value to your customers’ lives by meeting their needs, addressing their pain points and saving them money and time. Likewise, value-based content is content that accomplishes something your customer cares about, such as answering their burning questions or teaching them something worthwhile. When times are tight, value-based content demonstrates why your products and brand are still worth investing in.
Allocate your marketing budget effectively
Having a flexible budget is a more effective approach than cutting everything in sight. During a recession, you may find you can switch to a more affordable strategy while achieving the same results, or you can focus on promoting your less expensive services.
Strengthen your brand
A recession can be an excellent time to assess your brand and how you can improve, focusing on your mission, your unique selling proposition (USP) and your user experience (UX).
Create a resilient marketing plan
By building a marketing plan that prepares you for recessions well in advance, you’re much better prepared to ride out the worst impact. Digital marketing is a lot more affordable than traditional marketing, and if you’re looking for a digital marketing plan, you’re in the right place.
Get the Most Out Of Your Marketing with Anchor Digital
If you’re looking for a marketing strategy that will keep your business successful through both downturns and growth periods, Anchor Digital has you covered.
Our strategy services have helped purpose-driven brands succeed through good times and bad, with services from brand positioning through to acquisition and retention planning. If you need to do some work on your USP and what your brand stands for, we can help you build your identity from scratch and identify your target demographics.
Performance is a crucial factor in conversions. Using tools like search engine optimisation (SEO) and PPC, we’ll create an experience that leaves users satisfied and drives conversions.
To find out more about marketing during a recession and to become even greater at what you do, contact the Anchor team.
