DirectMail IO Blog

Thriving During a Recession

Written by Mike Paine | Oct 1, 2020 3:10:06 PM

Few words make a business owner’s blood run cold like “recession.” When it comes to a recession, there’s little you can do. You cut your costs where possible, and hope to ride out the storm.

But, wait. What if there’s something you can do, or even a lot more you could do? What if, instead of being a problem, a recession was an opportunity for you to pull ahead? Take a look at how companies have invested in marketing to outpace competitors in past economic downturns:

  • During the Great Depression, industry leader Post Cereals was forced to eat the dust of Kellogg as they blew past them. While Post hunkered down, Kellogg saw an opportunity and increased profits at a rate of 30%. Post is still chasing Kellogg, to this day.
  • A recession in 1990-91 caused McDonald’s to pull back on its marketing. Taco Bell and Pizza Hut saw their move and experienced 40% and 61% increase in sales, respectively.
  • When 2008 saw its recession, Del Monte recognized its chance. The company hired its first chief marketing officer and rolled out a series of customer-focused campaigns. In one short year, they went from a loss of $10.1 million to $58.6 million in profit.

“Don’t scale back spending. The old way of dealing with a recession was to slash and burn head count, marketing, and capital investment. But companies that do that are likely to be out of business in five years. Now is not the time for across-the-board cuts.”

 — Bill Pearce, CMO, Del Monte Foods

These are a few examples, but beyond specific instances where you can see the principle in action, the trend holds across large and small businesses. McGraw-Hill Research examined the marketing activity of 600 companies during the 1980 recession. Companies that held steady or increased their marketing investment enjoyed growth for the following three years. By 1985, those that had aggressively pursued expansion experienced growth at a rate of 256%. Here are some solid reasons why it makes sense to invest in marketing during a recession:

You’ll Gain Brand Voice

When everyone else is pulling back, it creates a potential gap in the market where you’re free to step in. You’ll have more opportunities to grab the attention of your target market as well as develop a voice as an expert in your industry.

It’s Easier to Cut Through the Noise

Somewhat related, if your competitors aren’t saying much, you don’t have to work quite so hard to get through to your audience.

You’ll Build Credibility

 While others disappear from the scene, you’ll be a reassuring presence to your market. They will see your brand as stable, as others falter.

It May be a Once-in-a-Lifetime Opportunity

Rather than pulling back, your brand should pounce! This may be a situation that will never present itself again, when other companies are reeling, and you’re ready.

Once you witness the impact that investing in marketing during a recession can have, you’ll be ready to prepare for the next one. Having a recession-ready account helps you not only remove your fear about encountering a recession, but it also helps you invest when others are scrambling to stay in business.

Contact us at DirectMail.io for more ideas around marketing for growth opportunities during a recession.