Why You Shouldn’t Cut Your Marketing Budget During a Recession
Marketing and Advertising During a Recession Increases Market Share and Brand Awareness
Marketing is the least understood area of a business, which is what makes it easy to cut from your budget when a global pandemic hits. Yet, history has proven time and again that recessions provide a golden opportunity to increase brand awareness and capture more market share when the economy rebounds.
During past recessions, many organizations panicked and drastically cut their marketing and advertising budgets. Others, however, took a more strategic approach. Understanding that negative economies rebound, they maintained or increased their marketing and advertising budgets while pivoting their marketing efforts to better position themselves for the recovery. In the end, these companies strengthened their brand and position in the marketplace.
Take a look at how this has played out throughout some of the major historical economic downturns:
| Recessionary Period | Conclusion | Studied by |
| 1920s | Largest sales increases reported by companies that increased advertising. | Harvard Business Review |
| 1970 | Increased advertising provided sales and/or profit advantages in years following the recession. | ABP and Meldrum & Fewsmith |
| 1974-1975 | Maintaining advertising during the recession produced higher sales and net income during and after the recession. | ABP and Meldrum & Fewsmith |
| 132% 5-year sales growth for companies that advertised during the recession. | McGraw-Hill | |
| 1981-1982 | 275% sales growth by 1985 for companies that advertised through the recession. | McGraw-Hill |
Source: https://www.msi.org/reports/should-firms-increase-advertising-expenditures-during-recessions/
While there are ways to trim your marketing budget without hurting your business, Peter Drucker explains why maintaining or increasing your marketing—even during challenging economic times—is critical:
“Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
Your ability to keep and attract customers will determine the success of your business. So, marketing and advertising are critical to your organization’s survival as the economy opens back up, as customers react to record high unemployment, new COVID safety measures, and restricted access to certain services.
“I have yet to see any study that proves timidity is the route to success. Studies consistently have proven that companies that have the intelligence and guts to maintain or increase their overall marketing and advertising efforts in times of business downturns will get the edge on their timid competitors.”
– J. Welsey Rosberg, Senior Vice President, Meldrum & Fewsmith
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