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Why does your business need Digital Marketing during a recession?

Digital Marketing Recession

Digital Marketing Recession.

Remember Game of Thrones? Well, the recession is coming...

In the same way that the characters in the medieval epic series feared the arrival of the "White Walkers," today, every type of business, from large to small, prepares to confront the obstacles that a recession brings.

What are those obstacles?

Recessions put everyone in trouble. The entire productive sphere enters into crisis due to continuous economic stagnation. Consumers decide to save for only necessary expenses, companies seek to economize what they have to be able to survive in troubled times, and as a result, we see how they cut production costs; lenders are much more picky with credits and on the employee side, many fear that the following email in their inbox will be a layoff one due to the crisis facing the company.

Marketing is not foreign from all these cut costs, and many companies decide to save reserves by cutting advertising expenses. However, digital marketing can be a torch through all these dark times, which is why, in this article, we will discuss how digital marketing can help you get through these times.

We take it one step at a time, so let's answer first.

What is a recession, and could it happen in 2023?

A recession is a decline in economic activity that extends considerably. As Investopedia explains, a common symptom that a recession might be coming is that there have been two consecutive quarters of negative gross domestic product. National Bureau of Economic Research (NBER) professionals evaluate these situations based on factors like nonfarm payrolls, retail sales and industrial production.

But why is there a recession as of 2023? Or even more, is there really a recession happening now?

Since we faced many disastrous events during the last couple of years, including the COVID-19 pandemic, growing inflation and the conflict between Ukraine and Russia, many of us could think that we are on the edge of economic troubles. But luckily for business owners and investors, it could be quite the opposite.

While media and other economist experts predicted that 2023 would be the year of the inevitable recession, according to a CNN report on this topic, hiring has accelerated, adding an impressive 339,000 jobs in May. Experts consider this value a good factor as more jobs than the US economy added in 2019.

Regardless of this, we have seen some massive layoffs in technology companies. Some are closer to us, as happened on Facebook and Twitter. 

While economists look at the future brightly due to high employment rates, Americans don't feel that way. In a survey, 76% of respondents described the economy as "out of shape."

Whatever the case, we never know what "surprises" could come at the end of the year or even in 2024, so it's always better to be ready.

How does a Recession impact customers?

As a business owner, you need to know how customers handle a possible recession so you can better plan how to manage them during one.

Nonetheless, there are two different types we want to explain: B2C and B2B customers.

For B2C, the first thought when a possible recession is coming is to panic. Consumers worry about how economic changes could affect their finances and lifestyle and decide to change their consumption. This change means spending less on wants and saving more for needs.

However, what happens within B2B?

A recession will entail structural changes within any company, the typical cost cuts, price changes or, in the worst case, staff reduction.

Even so, businesses need each other's services to survive during a recession, so abandoning alliances would be detrimental.

In times of recession, companies' minds should focus on strategies that help them improve their brand awareness, business growth opportunities, potential leads and business health.

This is where the dilemma lies within this article. In times of recession, the tool that can help you most achieve the objectives that will keep you afloat is digital marketing, which can be more accessible and efficient than traditional marketing strategies.

Although cutting marketing expenses seems like a viable solution for businesses, the reality is that saving what is necessary for these occasions is what can help you keep your business afloat.

Why is Digital Marketing essential during a recession?

One of the most common actions at the time of a recession is to cut costs in everything that is not essential. But marketing is still something of utmost importance for any brand during an economic downturn since these tools are what allow you to continue growing in the long term.

Disappearing on social media or other digital channels during a recession can make people forget about you in the spotlight, and that can cause more damage than giving your brand a break.

So, let's see what other reasons make digital marketing an appropriate option to surf the unstable waves of the economy.

Digital Marketing is more approachable than traditional marketing.

While mixing these two forms of advertising can be good for your brand, it is fair to give a point in favor of digital marketing during economic difficulties since digital strategies can be more monetarily accessible and, fortunately, as or more effective than the traditional ones of radio or television.

We could look for statistics on how much more people use the Internet than traditional media, but it's easy to see when going out or living with others.

The arrival of social networks as a means of communication and their accessibility through smartphones makes it easier to see advertising through our cell phones than through television.

In the same way, social media gives a more accessible opportunity to all types of companies to send their message through mass media, something that would be more difficult to do on TV.

Therefore, if you are worried about expenses, it is fair to say that digital marketing could save you some. If you want to know more about the debate between digital and traditional marketing, click here.

Data is gold!

You can understand how your customers behave with the data from your digital channels and website. This ability is important in a recession since, as we have seen, both types of clients take precautions during these times, and by being able to evaluate their behavior you can better see where you should cut costs and what not.

Data and analytics are essential to give your customers what they want and even offer personalized experiences that adapt to the consumption changes that could occur during these times.

Segment your audience.

Connecting with the personalization aspect of data and analytics, as you evaluate how your audience behaves during a recession, you can separate them into groups according to their preferences and new consuming habits. 

In the first level, you can organize them depending on their preferred products or services. Still, you can go a little more specific and pick some inspirations on the categories the Harvard Business Review identified four customer segments you must keep in mind when marketing during a recession:

  • Slam-on-the-breaks: customers that quit from spending.
  • Pained but patient: customers who cut back on spending but want to be sure they’re getting the best deal.
  • Comfortably well-off: customers who experience minimal impact from a recession.
  • Live-for-today: customers who are still willing to spend despite a recession.

Since customers will still use Google, SEO and PPC are a necessity.

Economic debacles will never be an impediment for people to continue consuming content through Google, and that is why your brand or website must appear in the searches of your potential users.

For this, in digital marketing, we use search engine optimization. This tactic consists of finding out the "keywords" or terms that your general audience most often searches for to create content on all those topics they search for. By creating valuable content for all their questions, these users begin to see that you are an authority within your niche, and therefore, your chances of becoming customers increase.

These SEO strategies become long-term investments, creating current content for everything your audience searches for.

Once you have gained important spaces in the search engines, you can move on to the next step, pay-per-click (PPC), which consists of creating personalized ads that appear in your audience's searches, ultimately allowing you to expand your market.

There is less competition.

If many brands follow the instinct to cut costs on marketing and advertising during the recession, then this is your chance to finally surpass them. With fewer people spending and competing for people's attention, it's your time to launch the right campaigns and take advantage of a time of crisis.

With less competition, the most searched keywords can lower their price, and this allows you to rank more easily if you take advantage of the momentum.

Final thoughts

Although the arrival of a recession seems to be ambiguous at the moment, it is always good to have a contingency plan for when the crisis may arrive.

Suppose you do not take accurate preventive measures. In that case, it is most likely that you will make wrong decisions at the time that hinder the growth of your company, such as completely removing expenses from your company's advertising and marketing.

In digital marketing, we learned that if you want to stand out within this entire tidal wave of business on the great World Wide Web, the most important thing is to know how to attract users' attention with accurate strategies.

If you need further advice with your digital marketing strategy, our team of experts can help you apply personalized strategies to your niche and, above all, to any socio-economic situation that may be occurring. If you want more information, contact us!

FAQS - Frequently Asked Questions

What defines a recession and how does it affect businesses?

A recession is defined as a significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For businesses, a recession can lead to decreased consumer spending, tighter credit conditions, and increased uncertainty. This environment often forces companies to streamline operations, cut costs, and reassess their strategies to maintain profitability and sustainability. During these times, market dynamics shift, and consumer priorities may change, affecting sales, revenue, and overall business growth.

Why is digital marketing crucial during economic downturns?

Digital marketing becomes crucial during economic downturns because it offers cost-effective, flexible, and measurable ways to reach and engage customers. Unlike traditional marketing methods, digital channels allow businesses to adjust their strategies quickly based on real-time data, ensuring resources are not wasted and opportunities are maximized. Moreover, with consumers spending more time online, digital marketing enables businesses to stay top-of-mind and maintain visibility. Effective digital marketing can help companies build brand loyalty and trust, which are invaluable during periods of economic uncertainty.

How can digital marketing strategies adapt to a recession?

During a recession, digital marketing strategies should adapt by focusing on providing value, optimizing budgets for high-performance channels, and leveraging data analytics for targeted campaigns. Strategies should prioritize customer retention through engagement and personalized content. Cost-efficiency can be achieved by reallocating budgets towards the most effective digital channels, like SEO and targeted social media advertising. Businesses should also explore new technologies and platforms for innovative ways to connect with their audience. Adjusting messaging to emphasize reliability, affordability, and value can resonate well with consumers' changed priorities during a recession.

What role does SEO and PPC play in maintaining visibility during tough economic times?

SEO and PPC play pivotal roles in maintaining business visibility during tough economic times by ensuring that companies remain prominent in search engine results and digital spaces where potential customers are active. SEO provides a cost-effective way to achieve long-term visibility and organically attract traffic to your website, which is especially important when budgets are tight. PPC, on the other hand, offers the ability to quickly adjust campaigns and target specific demographics, geographies, and psychographics with precision, ensuring that advertising budgets are spent efficiently and effectively. Together, they offer a balanced approach to maintaining visibility and driving traffic during economic downturns.

How can data analytics support businesses in targeting their audience more effectively during a recession?

Data analytics enables businesses to understand customer behavior, preferences, and trends in greater depth, which is crucial for targeting audiences more effectively during a recession. By analyzing data, companies can identify which products or services are in demand, understand how consumer priorities have shifted, and adjust their offerings accordingly. Analytics can also help optimize marketing spend by pinpointing the most effective channels and messaging for engaging the target audience. This targeted approach ensures that marketing efforts are not only more cost-effective but also yield higher returns by resonating better with the needs and wants of consumers during challenging times.

In what ways can digital marketing be more cost-effective compared to traditional marketing during economic downturns?

Digital marketing can be more cost-effective compared to traditional marketing during economic downturns for several reasons. First, digital channels often have lower entry costs and allow for more precise targeting, reducing waste and increasing the efficiency of marketing spend. Additionally, digital marketing efforts are easily trackable and measurable, enabling businesses to quickly identify and optimize their most effective strategies and channels for a better ROI. The flexibility of digital campaigns means that businesses can pivot their approach in real time based on performance data, ensuring that budgets are always allocated to the highest-performing initiatives. Moreover, digital marketing facilitates direct engagement with customers, fostering stronger relationships without the need for large-scale, expensive campaigns.

How does consumer behavior change during a recession, and how should marketing strategies adapt?

During a recession, consumer behavior typically shifts towards more cautious spending, with increased value-seeking and prioritization of essential over luxury goods. Consumers may also delay major purchases and seek more reassurance about the quality and reliability of the products or services they do buy. Marketing strategies should adapt by emphasizing value, reliability, and customer service. Messaging should focus on how products or services can solve problems or improve lives in cost-effective ways. Additionally, brands should increase their engagement efforts, offering supportive content and leveraging social proof, like customer testimonials, to build trust and confidence among consumers. Tailoring offerings and promotions to meet the specific needs and concerns of consumers during a recession can also drive more effective engagement and conversions.

What opportunities does a recession provide for digital marketing?

A recession can provide several opportunities for digital marketing, including the chance to capture market share from competitors who may reduce their marketing efforts, to build deeper relationships with customers through targeted and value-driven campaigns, and to innovate with cost-effective digital tools and platforms. Recessions often prompt businesses to refine their strategies and operations, leading to greater efficiency and creativity in marketing efforts. Additionally, changing consumer behaviors during a recession can open up new markets or demand for products and services that cater to the evolving needs, creating opportunities for businesses to pivot or introduce new offerings effectively through digital channels.

How can businesses measure the effectiveness of their digital marketing efforts during a recession?

Businesses can measure the effectiveness of their digital marketing efforts during a recession by setting clear, measurable objectives and using a range of analytics tools to track performance against these goals. Key performance indicators (KPIs) such as website traffic, conversion rates, customer acquisition costs, return on ad spend (ROAS), and customer lifetime value (CLTV) can provide insights into how well digital marketing strategies are performing. Engagement metrics, including social media interactions, email open rates, and content engagement rates, can also help assess how effectively a business is connecting with its audience. Regular analysis of these metrics allows businesses to optimize their strategies for better results continuously.

Why might partnering with a digital marketing agency be beneficial during economic challenges?

Partnering with a digital marketing agency can be beneficial during economic challenges for several reasons. Agencies bring a wealth of expertise and experience in navigating market downturns and can provide innovative, cost-effective strategies tailored to a business's specific needs. They have access to advanced tools and technologies for analytics, targeting, and optimization, ensuring that marketing budgets are used efficiently to achieve the best possible outcomes. Agencies can also offer scalability, allowing businesses to adjust their marketing efforts quickly in response to changing market conditions. By leveraging the skills and resources of a digital marketing agency, businesses can focus on their core operations while still driving growth and maintaining visibility in a challenging economic landscape.

About Bruno Gavino

Bruno Gavino is the CEO and partner of Codedesign, a digital marketing agency with a strong international presence. Based in Lisbon, Portugal, with offices in Boston, Singapore, and Manchester (UK) Codedesign has been recognized as one of the top interactive agencies and eCommerce agencies. Awarded Top B2B Company in Europe and Top B2C company in retail, Codedesign aims to foster personal relationships with clients and create a positive work environment for its team.  

He emphasizes the need for digital agencies to focus on data optimization and performance to meet the increasingly results-driven demands of clients. His experience in digital marketing, combined with a unique background that includes engineering and data, contributes to his effective and multifaceted leadership style.

Follow Bruno Gavino on Linkedin

About Codedesign

Codedesign is a digital marketing agency with a strong multicultural and international presence, offering expert services in digital marketing. Our digital agency in Lisbon, Boston, and Manchester enables us to provide market-ready strategies that suit a wide range of clients across the globe (both B2B and B2C). We specialize in creating impactful online experiences, focusing on making your digital presence strong and efficient. Our approach is straightforward and effective, ensuring that every client receives a personalized service that truly meets their needs.

Our digital agency is committed to using the latest data and technology to help your business stand out. Whether you're looking to increase your online visibility, connect better with your audience, get more leads, or grow your online sales. For more information, read our Digital Strategy Blog or to start your journey with us, please feel free to contact us.

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