Advertising in a Recession

How to make your advertising dollars count when you need it most

We’ve seen it happen before, and we’re seeing it again now – as the threat of recession looms and encroaches on business profit, owners react with fear and quickly withdraw expenditure wherever they can. 

One of the first things to go is often advertising spend, but this is rarely ever the best move to make. When times are difficult, it’s easy to let emotions take over and to make fear-based business decisions. 

However, in a downturn it’s more important than ever to rely on logic and data for your decision-making. With the right approach, your digital advertising can make the difference between scraping by and coming out strong. 

Let us help you be strong.

Why you should continue advertising in a recession

Evidence from past recessions shows that businesses who continued to advertise, or even increased their spend throughout the downturn, actually grew their revenue both during and after the recession – while those who went dark, faced harder and longer recovery times. 

  • McGraw-Hill Research looked at 600 companies from 1980-1985, and found those who continued to advertise throughout the 1981 recession had sales that were 256% higher by 1985 than those who went dark. 
  • In 2008, Millward Brown showed that 60% of brands that went dark for 6 months during an economic downturn saw a 24% decrease of brand use, and brands that cut at a higher rate risked greater loss.  
  • An IPA (Institute of Practitioners in Advertising) study in 2008 observed that “A brand judged to be on the way down because it has fallen silent will very rapidly see this manifested in word-of-mouth, which will accelerate the perception of failure”. 

Although every recession is different, there are a few reasons why we believe we’ll see the same outcomes for businesses who continue to advertise online throughout a downturn: 

  1. There are more eyes on screens right now than ever before

Digital media is booming as customers are consuming more content (and more frequently) while they’re stuck at home, combating boredom and isolation. While other forms of advertising are declining in effectiveness, digital advertising is only growing. 

  1. When other businesses withdraw advertising, there’s less competition

As your competitors withdraw their advertising, you’ll face less competition both for space and cost. Advertising therefore becomes cheaper for the few remaining businesses, while also providing increased opportunity for being seen – it’s a win-win. 

  1. Customers want confidence, reassurance and trust

In these unsettling times, customers are looking for business confidence, to know where to place their trust. Remaining visible online is a demonstration of strength and reassurance. Going dark, however, is a surefire way to lose the confidence you’ve worked so hard to build with your customers, and it could take a long time to regain it.

Advertise with confidence and the right approach

Holding onto confidence in a recession – from your customers and in yourself as a business – is key, but even more important for lasting results is how you approach your advertising. 

The practices you were used to before will need to change – now that every dollar counts more than ever, you need to know how to maximise each cent you spend. 

In ordinary times, you’d expect a decent return on your advertising investment, now, you have to demand it. Here’s how we’re helping our clients: 

  1. Focus your attention where it counts

In a recession, your margin for error is smaller. As your business makes narrower profit margins, it’s harder to financially justify a scattergun approach to digital advertising – throwing countless ads out at the world and hoping one or two stick. Use the data you have, find out what works, and focus on that. 

  1. Be agile with your strategy

As the world changes and your customer needs shift, you have to be ready to meet new demands. How are your customers consuming media right now? Where are they looking to spend their money? What is the most effective way to reach them? Be ready to change tack to stay on top. 

  1. Look for the highest return on your investment

Now is not the time to go wide with branding messages, it’s time to narrow down your strategy to ensure you’re getting the most bang for your buck by upping your conversion rate. In order to get a higher return on your advertising spend, turn to past data to see which avenues have consistently high conversion rates at a low cost, and capitalise on those. 

  1. Target your promos efficiently 

With your advertising creative, you need to be targeting customers who are already warm – showing intent to purchase – so less effort is required to pull in a sale and get higher success rates. Next, you want to give those customers a reason to buy now, with a limited time offer, low stock promotion, or other temptation to get them past the gate.

Make it count with Sprocket

As performance-driven digital marketers, we’re dedicated to getting results for our clients. In the past month, we’ve pushed ourselves to continue growing our clients’ businesses through digital advertising, even through the uncertainty and fear of Covid-19 and the lockdown. 

We’re confident in our ability to call on our past experience, in-depth knowledge, and creative strategies to carry our clients through the recession. 

Let’s take a look at how we’ve achieved this for a client:  

In late March, when the implications of the lockdown became apparent, we worked with a client to identify areas of opportunity based on recent historic data. This allowed us to pinpoint which products would be selling well over the lockdown period, and invest a larger share of budget into promoting those products. Our advertising had to change rapidly to address the lockdown situation and communicate the business’ operational status at both level 4 and level 3. 

This client is now consistently hitting all-time high year-on-year revenue figures, with March 2020 showing a 20% increase over March 2019.  

As new products are able to be sold (non-essential items), we have increased the overall budget for the campaign to ensure the clients’ share of voice isn’t impacted. Throughout this lockdown period, our client has seen digital become their primary sales generation tool, and is now investing more than ever into their digital advertising. 

Another of our clients has experienced a 331% increase in revenue since Covid-19 began, and yet another has been hitting a consistent 60:1 return on advertising spend throughout this period.

What does this show? That there’s light not just at the end of the tunnel but right here, right now. 

It’s possible to achieve results and gain customers even in a challenging situation like a nationwide lockdown and global pandemic. 

Remember that as with any downturn, it won’t be this hard forever. Every recession consists of three stages – the fall, the climb, and the growth on the other side. 

The fall we’re in at the moment may appear daunting, but don’t let doubt cloud your judgement. We’ve got the tools to climb back up, and every step we take now will help us grow stronger for the future.

Talk to our Team to find out how we can help grow your business


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