When economic downturns hit, businesses often look for ways to trim expenses and protect their bottom line. Unfortunately, public relations (PR) and marketing are frequently the first areas to be slashed, as companies react to falling revenues. History shows that reducing or eliminating marketing efforts during tough times can be a costly mistake; the companies that have bounced back from previous recessions usually did not cut their marketing spend, and in many cases increased it instead. A 2018 study at the University of South Australia’s (UniSA) Ehrenberg-Bass Institute for Marketing Science found that when brands stop advertising for a year or more, sales often decline year-on-year following the stop. On average, sales fell 16% after one year, 25% after two years, and 36% after three years.
During tough economic times, PR can help businesses maintain credibility, reassure customers, and build relationships – all of which are crucial when consumer confidence is low. Instead of cutting back completely, businesses should rethink their strategy and focus on high-impact marketing and PR activities that will help them weather the storm and emerge stronger.
Marketing and PR as an engine for future revenues
PR and marketing are not just expenses; they are investments that drive business growth. During an economic downturn, maintaining visibility and engagement with customers is crucial. While the UniSA study found that the rate of decline in business following cuts to marketing activities is fastest for brands that are already declining before the advertising stop, and small brands typically suffer greater declines than bigger brands, these decisions can be incredibly damaging to businesses of all sizes in the long run:
“While it may be tempting to withdraw the advertising budget for a boost in profits, the evidence suggests that doing so risks putting the brand on a downward sales trajectory. Without refreshment, mental availability erodes. Silent periods extend the gap between consumers making a category purchase and them last seeing brand advertising. In this gap they may be nudged by a competitor’s advertising, or your critical memory-based brand linkages will erode”.
If a company reduces its PR and marketing efforts too drastically, consumers may also assume the brand is struggling or even going out of business. Instead of completely turning off marketing efforts, businesses should focus on maintaining a presence, ensuring that customers remain aware of, and engaged with, their brand.
Smart adjustments instead of cuts
One of the biggest risks of slashing marketing and PR is losing momentum. Out of sight often means out of mind, and competitors who maintain or even increase their marketing efforts during a downturn can capture that leftover market share. Businesses should aim to keep their brand in front of consumers, which means that scaling back PR and marketing activities is a much better option than stopping completely. A well-thought-out PR and marketing strategy can reassure customers, build trust, and position a company for success when the economy rebounds.
Rather than eliminating marketing and PR completely, smart businesses adjust their strategies. You can reallocate resources to high-ROI tactics like digital marketing, content creation, and earned media (through PR) rather than expensive traditional advertising. Focus on revenue-generating activities, ensuring that marketing efforts are directly tied to driving sales both now and in the future. Leveraging cost-effective channels is crucial at this stage – social media marketing, email marketing, and targeted online ads are a great way to maintain engagement without breaking the bank. Even during economic downturns, consumers are still active on social media. Engaging content, organic interactions, and strategic paid campaigns can help maintain brand awareness and drive customer engagement, while email marketing remains a powerful tool to nurture leads, retain customers, and communicate offers effectively. Similarly, while ad budgets should be adjusted based on business needs, maintaining a presence through highly targeted online advertising can continue to drive sales and brand visibility at a reasonable cost.
The companies that keep marketing win
Instead of eliminating PR and marketing, smart businesses reallocate their budgets. Historically, businesses that maintain marketing and PR efforts during economic downturns emerge stronger. By staying visible, keeping customers engaged, and making smart, strategic adjustments, companies can navigate tough times more effectively and set themselves up for long-term success. Instead of making knee-jerk cuts, businesses should focus on the activities that will sustain them now and fuel future growth.
In times of economic uncertainty, smart marketing is not an option – it’s a necessity. If you’re looking for professionals to help you make your marketing and PR activities more efficient, get in touch with us today.
