3 Ways to Manage Your Communications Budget During an Economic Downturn

The volatility and uncertainty that plagued the global economy in the first half of the year is likely to continue, at least until interest rate hikes and inflation stabilise, businesses are looking preserve their liquidity by reducing their consumption.

During my tenure as Chairman of DKC, I have advised a wide range of businesses and senior executives on how to communicate during times of economic uncertainty while simultaneously running our own business through the challenging conditions facing it. accompany. Over the years, I’ve found that companies’ handling of marketing and communications budgets follows a fairly standard two-part cycle during an economic downturn.

In the first part, companies carefully assess their budgets to make sure they can handle the uncertainties. This usually leads to cost reduction right from the start. The most aggressive cost-cutting measures often come early or midway through the first quarter of an economic downturn. As “dry powder,” “more with less,” “recovery,” and other Glossary of Recession-Speak songs make their way into the operational vernacular, marketing and research spend customer are usually among the first on the chopping block.

Big mistake.

These initial cuts tend to focus on prospecting, top of funnel, and growth marketing. This leaves a substantial vacuum for news, new product discovery, and target marketing — the very mechanisms of customer outreach and acquisition that give businesses a competitive edge and drive growth when they need it most.

Sean Cassidy, Chairman of DKC

Ironically and counterintuitively, the greatest communication returns often occur during periods of economic contraction. The most successful brands have, without exception, embraced the philosophy that spending on customer outreach and communication with key audiences in difficult times is critical to survival and future growth.

According to a Harvard Business Review report, “Products launched during a recession have both higher chances of long-term survival and higher sales revenue.” As other brands fold, companies that continue to invest in communications — rather than viewing it as a cuttable line item — will emerge stronger and often outlast the competition. The business that dies during this period is at a great disadvantage compared to those that continue to engage with their consumers.

When many cut back on their marketing, a company’s share of voice can increase if it can maintain or even increase its communications spend. a slowing economy. A company’s messaging should reflect the real-world challenges its customers face.

Here are our tips for clients who want to seize the advantage and make smart, strategic decisions by investing marketing dollars during this volatile time instead of cutting back on PR during an economic downturn:

  1. Earned media attention trickles down to the consumer in a unique way through automatic third-party endorsement combined with positive media coverage. As people turn away from traditional ads, media coverage provides an asymmetric advantage amid tighter wallets. The key here is to react and act quickly. Now is not the time to sit idly by or make bureaucratic plans. If you can assign responsibility and act quickly, you’ll likely seize opportunities that others won’t. You need a partner who understands the news landscape and your industry.
  2. Better targeted marketing. Your target customer base may very well change during times of economic volatility, but improving the use of data to better reach your consumer will deliver a significantly better return on investment. A great data professional can help you better understand your customers and determine who is buying what during an economic downturn while helping you find and target specific audience groups in an effective and measurable way. This concept not only applies to media spend, but extends to creative investments such as influencer engagement.
  3. A trusted communications team. Now more than ever, it’s important to have a partner agency or internal communications team that understands the global market and business environment as much as they understand the media landscape and are able to tell stories that resonate. The communications team must have a seat at the table when it comes to making key decisions. Small, nimble, and strategic cross-functional teams will be able to move quickly and rotate as needed as the economic and consumer landscape changes.

If you take nothing else away, remember this: in normal times, targeted and measurable paid digital marketing that is integrated with strategic earned media has one of the lowest customer acquisition costs in all the communication methods of the marketing toolkit. During an economic downturn, CAC may decline further due to lower costs associated with purchasing digital inventory.

So it’s time to go find new customers.

This brings us to the second part of the cycle.

Companies with a sophisticated understanding of the impact of communications on bottom lines often maintain or increase spending during a recession. However, like timing, companies that shut down at the onset of the downturn typically realize after about a quarter and a half or two that competitors who have continued to invest in strategic communications are now eating their lunch and ready for the aftermath. -recession market dominance. anywhere between 16 and 24 weeks, we’re starting to get a lot… “Hey, we’re ready to do it again. How are you tomorrow? calls. We are receiving them now.

In times of uncertainty, businesses cannot disappear from the minds of customers or potential customers. If they continue to communicate with and engage their customers, brands can not only survive an economic downturn, but they can also emerge stronger. Investing in communications and being comfortable making news will allow you to withstand the pressure and bounce back quickly.

Sean Cassidy is president of DKC.

COMMENT

Comments are closed.