I haven’t seen a mad rush by manufacturers in the engineering and scientific sectors to change their marketing plans in the wake of the current market and exchange rate turbulence. However, I suspect that there are a few meetings on the subject taking place. It’s therefore worth learning from history, because we’ve been here before.
The best argument for Keeping Calm And Carrying On is to look at your company’s sales in the last recession (and I’m not saying we’re inevitably about to have another one). This was Q2 2008 to Q2 2009 in the UK. The companies we worked with back then seemed to spend their way out of it quite positively – although I admit we do tend to work mainly with those which have an enlightened outlook towards marketing. The two clients who apologetically informed us in 2008 that market conditions meant their advertising was being scrapped (totally – like it was an indulgence!), are no longer in business. (I do realise there’s a chicken-and-egg situation involved there.)
If there is a recession, or even the threat of one, some companies will cut back on advertising. That’s the way of the world. But reduced competition should make promotion more cost-effective, of course.
What if there’s less business to be had out there? All the more reason to be spending money on trying to track it down, surely. Research shows that firms that cut advertising spending during a recession typically see sales and income fall by 20-30% over the next two years as a result. So any boost to the bottom line by cutting the marketing budget is usually small and short term.
Worse still, reducing your visibility means it will take longer to regain it when things improve. That’s just common sense.
If it’s your sales team which is skeptical about maintaining the advertising budget when cuts are being ordered in general, the best argument is that a recession can be a great opportunity to beat up competitors. Advertising is cheaper, but many competitors will take poor advice and won’t be doing so much.
In addition, this could be a good time to build better relations with existing customers and prospects. Rise above any economic downturn, if it comes, by becoming someone who can be depended on.