Advertising Your Business During an Economic Downturn
When the economy slows down it can be unsettling for everyone, especially local businesses. Understandably, some businesses think the right move is to scale back advertising to match consumers’ reduced spending. Everything from stock market dips to pandemic scares can prompt consumers to think twice about every purchase they make, which can make the prospects of driving sales a little more daunting to businesses—especially when your industry tends to be more vulnerable to changes in the economy.
But while it can seem counterintuitive to keep spending on ads even as all other spending activity slows down, there are important benefits and opportunities that businesses give up by throwing in the towel and scaling back ad campaigns. What can feel right in the heat of the moment can have damaging consequences that continue to hurt your business long after consumer spending has returned to normal.
Here are three reasons why it’s smart to stick to your advertising strategy in the face of economic uncertainty.
1. YOUR COMPETITORS MIGHT BE SCALING BACK
You aren’t the only business owner worried that your ad spending is all for naught when up against a slow economy. But that’s exactly why you shouldn’t make any rash decisions: As businesses panic and pull the plug on ad campaigns, they thin out the market for competition and give you a better path to reading your audience.
Reduced competition can be of particular benefit anytime your ad spending is affected by the competition for that ad space, such as advertising based around keywords. With fewer bidders, an economic downturn could lower your bid prices and allow you to get more advertising bang for your buck. Savvy advertisers understand that a soft economy creates a buyer’s market for more cost-effective ad campaigns.
Meanwhile, the absence of your direct market competition can help you better establish your brand with your target audience, strengthening your local reputation in a way that will deliver benefits well into the future.
2. LESS ADVERTISING CAN LEAD TO LESS REVENUE
You spend money on advertising to drive revenue for your business. By scaling down advertising, you almost guarantee a decline in revenue, which can have long-lasting effects.
In some cases, businesses can overcorrect for the economic downturn and actually cause or worsen this financial hardship through their own actions, rather than suffering losses as a result of larger economic trends.
Cutting back on advertising can save you money in the short-term, which feels like you’re insulating your business against the ill-effects of economic uncertainty. In reality, though, the advertising savings you reap today will impact your sales tomorrow. Advertising isn’t always just about driving sales in the moment—it’s about establishing your brand so that customers think of you when they are finally ready to spend, even if that payoff occurs down the road.
3. CERTAIN AD CHANNELS CAN OFFER MORE EXPOSURE
Some economic disruptions are the product of disruptions to daily life. Severe weather and pandemic scares often force consumers to spend more time in their homes, which means they’re spending more time consuming media that can be used to engage them through advertising.
Cable TV advertising, streaming video ads, mobile display ads and social media ads are just some of the channels that can actually offer increased exposure due to the increased time being spent on these channels. This is a great opportunity to build brand awareness and keep your business top-of-mind throughout periods of social isolation.
During periods of social and economic uncertainty, advertising can feel like a risky venture for businesses. But while certain aspects of daily life may slow down, consumers are still fully engaged with digital advertising channels. By sticking to your current ad strategy, you can maintain a relationship with your local audience and help your business bounce back faster once daily life returns to normal.
The uncertainty surrounding an economic downturn can be uncomfortable to say the least, but keeping your advertising efforts - and your connection to your local community - consistent can lead to even greater success for your business in the long run.