Skip to main content

Where There is Fear There is Opportunity: Advertising in a Recession

There has been a lot of discussion lately regarding a looming downturn or even a recession. Whether or not this is realized in the coming months, an economic and business slowdown is inevitable.

Economic downturns can present several real challenges for advertisers, and they can also offer amazing opportunities to those who have the stomach for it. Even still, some of the biggest brands of today were born during downturns of the past.

The war in Ukraine, rising interest rates, and high inflation on goods and services will influence how consumers think about and spend their money. Declining consumer confidence will keep spending down and, in turn, advertisers will be fearful of declining revenues. During a recession business will often begin to cut back in various areas including their ad spending.

It has been shown that during economic downturns the level of advertising spending decreases along with declining economic activity. While this may seem to be a logical strategy, when advertisers cut back advertising spending, they become less visible to the public.

Businesses should focus on the opportunities a recession can provide; to have a presence when their competition does not, to take share when others are on the defense. Maintaining a strong advertising campaign during a recession has clear and proven benefits.

When advertising aggressively in the economic downturn, an organization can drive and maintain awareness, reinforce their brand, and drive market share. Success can be achieved both during a recession and afterwards. Advertising expenditure can be a sign of how marketers believe in their brands. It can give consumers the sense that the advertising brand has more stability during challenging times than brands that do not advertise.

Most importantly, when an organization cuts ad spending the brand loses share of mind with consumers, resulting in the loss of current and future sales.

According to Rebecca Barr, GainShare’s EVP, Media Strategy & Investment, “The media landscape becomes a buyers’ market in an economic downturn, resulting in improved media efficiencies when we leverage our remnant inventory purchase model."

Utilizing this model, one client experienced 42% improvement in the leading metrics efficiencies within the first quarter of beginning with GainShare and a 50% improvement at the end of six months. Additionally, the client’s TV budgets increased 23% versus the equalized budget YOY.

“A key to success” says Barr, “is to have long-standing partners in place to access unsold inventory to maximize savings and improve advertisers’ ROAS. The second key is to ensure the linear TV buy is part of an integrated plan working in conjunction with other channels. Just because the price is right doesn’t automatically mean the strategy is right.”

The bottom line: brands have a lot to lose by pulling back on ad spend during a recession and a ton to gain (increased brand awareness and market share, improved brand image) by staying the course. In addition, brands would be wise to engage an experienced advertising partner to ensure efficient media investments that can be optimized alongside the ever-changing market.

About the author

Chad MacKay, Associate Media Director

This website uses cookies. For more information read our privacy policy.