Why You Should Increase Your Marketing Budget During a Recession

It’s that time of the year when executives are making their final decisions on 2023 budgets. As the chief operating officer for The Mx Group, I recognize that while our agency’s size means that our performance depends more on our team’s activities than the overall economy, it’s still hard to ignore the odd economic times we are in right now. Most economists expect a recession in 2023 (if we aren’t in one already), with the Ned Davis Research Institute putting the odds at 98.1%.

When the word recession is uttered, the knee-jerk reaction for many organizations is to cut discretionary expense budgets, including marketing and branding. My directive to our team was that as we look at SG&A costs, our biggest priorities are marketing and people development. The prioritization on people development is clear — in our world where our people are our product, cutting training is like cutting R&D expenses, which may help in the short run but hurt in the long term.  The reason I increased our 2023 marketing budget, even as other budgets were cut or held flat, is because we know from history that marketing investment in a recession pays a bigger dividend than it does during an economic expansion.

Here are three reasons why organizations should make marketing their top priority during a recession:

1.) The proof is in the data — businesses that increase marketing spend during a recession not only do better during the recession, but they also do better coming out of it compared to their competitors. An Analytic Partners report found that 60% of brands that increased media spend in the last recession saw greater ROI, and those that spent more on paid advertising saw a 17% increase in incremental sales. The inverse is also true: Organizations that chose to cut marketing budgets ran the risk of losing 15% of their business to competitors that invested in marketing.

2.) More marketing real estate is available to increase your brand awareness. Media spend is expected to deflate. Analysts cited recent Google trends, with one analyst stating: “Online ad spending is clearly slowing more than we thought … It looks like it is going to be tough sledding for the next few quarters.” We’ve definitely seen this before. The 2008 recession showed a significant cut in ad spending as well. Ad spending in the U.S. dropped by 13% — newspaper ad spending dropped by 27%, radio by 22%, magazines by 18%, OOH by 11%, television by 5% and online advertising by 2%.

Organizations can leverage this deflation in media spending. If our competitors cut back on events and publishing thought leadership, then the voices of The Mx Group’s leaders will be heard more loudly. We can get our message out to more potential clients and reinforce our brand with our existing clients for less than we are spending now.

3.) Remember, recessions do end. And when they do, you want to be positioned for success. For a post-recession success story, look no further than Reckitt Benckiser. The company launched a marketing campaign amid the 2008 recession. The company persuaded consumers to purchase the more expensive, but better performing brands. Taking advantage of the low-cost media spend and available real estate, “Reckitt Benckiser actually grew revenues by 8% and profits by 14%, when most of its rivals were reporting profit declines of 10% or more. They viewed advertising as an investment rather than an expense.”

My confidence in marketing during a recession stems from The Mx Group’s 30-year legacy. Our leadership is made up of long-term partners and shareholders. We are investing in growth for the long term because it’s the right thing for our clients and our people. We’ve weathered recessions, a financial crisis, a pandemic and more. We will be around for at least another 30 years, so increasing our marketing spend in uncertain economic times is an investment in our future.