Don’t Stop Marketing in a Recession

This post originally appeared on THINKing. Reprinted with the author’s permission.

Well, here’s a big surprise: small businesses which spend more during a downturn actually do better financially. Marketing professionals have been giving this advice to businesses of all sizes since the first recession. But too many business leaders make marketing their first, instead of their last, cut. It’s nice to have some empirical data to prove our assertion.

According to the “Small Business Marketing Health Check” report from Hurwitz & Associates, there is a correlation between small businesses that are doing well and greater marketing spending. Almost two-thirds of small businesses that expected increased revenues had raised or planned to raise marketing spending, compared with just 32% to 36% of businesses with flat or declining revenues.

During previous recessions, American Business Press has sponsored two studies on marketing expenditures, and the group found that:

• cutting spending on marketing and advertising during a recession produces negative short and long-term results in relation to sales and profits
• additionally, during the 1974–75 recession years, the study found that companies not cutting marketing had higher sales and net income during those years and the two following years compared to companies which cut in either or both recession years.

But you have to be smart. A recession is not a time for profligate spending. You need to determine what is working best in terms of immediate lead generation and sales. Luckily, this time we have access to lower-cost, easier-to-track digital media.

The previously mentioned “Small Business Marketing Health Check” indicates that smaller businesses were shifting away from traditional media and toward social media, email newsletters and search.

“The survey clearly reveals that the use of low-cost Web-based marketing tools is playing a strategic role in helping businesses succeed,” said Laurie McCabe, partner, Hurwitz & Associates, in a statement. “Making a few changes to incorporate more online tools into the marketing mix seems to be a key ingredient to small business success.”

Harry Hoover is a Partner in the marketing communications firm My Creative Team.