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illustration of a blog post: How to Recession-Proof Your Marketing Strategy with Data-Driven Insights
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Paid Media 19 min read

How to Recession-Proof Your Marketing Strategy with Data-Driven Insights

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Written by Sarah Edwards

Content Writer @ Galactic Fed

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Expert reviewed by Rachel Meyer

Associate VP of Client Success @ Galactic Fed

Published 14 Mar 2023

Repercussions from a recession can be dire. Consumer and business spending dries up, it becomes more expensive to borrow money, and unemployment rises. However, companies can better insulate themselves from the adverse impacts of an economic downturn through recession marketing.

Advertising in a recession looks slightly different than in regular business cycles. For example, there’s more focus on the ROI of campaigns, and companies roll back their spending on techniques that don’t have a history of high conversions. That means it becomes even more critical to define your marketing objectives and target audience carefully. You can do so with the help of data-driven analytics.

In this article, we’ll discuss how predictive analytics, customer segmentation, and other digital marketing tactics can assist you in your recession advertising efforts.

Why You Shouldn’t Stop Marketing in a Recession

Recession road sign

Most companies seek to cut costs during a recession, and one of the first areas that see the axe is the marketing department. After all, marketing is flexible in that it typically has few long-term, restrictive contracts. For example, it’s easy to stop running commercials or paid advertisements for a while.

However, before you make any significant cuts, it’s essential to understand customer behavior during a recession. After all, some clients don’t respond as dramatically during a downturn as others do. They may keep spending, just as they always have.

You should also understand the dynamics of how your market sector typically performs during a recession. Some industries will feel more of a burn from a downturn than others. For instance, real estate, tourism, and hospitality sectors usually see a dip in sales performance. 

Other industries, including medical care, legal services, groceries, and pharmaceuticals, aren’t as susceptible to an economic downturn. If you’re unsure how your company will hold up during a recession, answer these questions:

  • Do you have a substantial bank balance to fund your organization for 6 to 12 months?
  • Do your customers pay you immediately, or are most of your sales on credit?
  • Do you have significant business loans?
  • Do you have more money going out than coming in?
  • Do you expect to see a significant dip in sales from your clients?

A company in an excellent position to sail through a recession will have funds it can rely on if customers stop buying their merchandise. If clients typically pay on credit, the company will have processes that ensure quick collection. Organizations with significant debts will take action to ensure they have enough money to meet their obligations.

So before cutting your marketing spend, determine where your company falls on the recession security spectrum. If you obtain most of your clients through your marketing efforts, you probably want to refocus your campaigns toward a specific target audience that’s most likely to convert. You typically don’t want to stop marketing altogether.

Taking a fine-tooth comb to your customer data can help you understand where sales opportunities lie, resulting in a higher ROI from your marketing spending. 

Understanding Data Analytics

Data analytics is the process of reviewing large sets of raw data to visualize current standings, explain trends, and make assumptions about the future. 

You probably already have lots of data you can use to understand your customers, including their past behavior, demographics, values, purchasing history, and ad engagement. Using data analytics, you can assess this information to determine what advertisements are most likely to result in a purchase or other conversion from a customer. 

Typically, marketing teams look to Google Analytics for information about their marketing strategies across different platforms. Google Analytics provides extensive reporting capabilities and combines data across social media, your website, email, and paid search ads that help you understand how customers interact with your brand.

With a platform like Google Analytics, you can create customized reports that tell you everything you need to know about your customers. That information can then help you decide where to focus your recession marketing efforts.

Incorporating Big Data into Your Marketing Decisions

While stopping marketing during a recession may be tempting, you’ll be doing your organization a disservice. Instead, rely on the information you have to fine-tune your campaigns and cut excess fat from your spending. Here’s how to start.

Review Prior Advertising Performance

Your first step is to perform an in-depth review of your marketing campaigns. Examine each strategy to determine which leads to the most conversions for the least spending.

For example, if you know you must reduce your marketing spend, you’ll want to reallocate your marketing budget toward high-performance marketing channels. If you find your social media ads are costly and don’t result in much consumer engagement, cut them. Similarly, if paid advertisements result in clicks but few conversions, it’s time to focus on other strategies.

Sometimes, you may not want to eliminate one strategy over another. Perhaps you’re paying for the wrong keywords in your PPC ads or you’re not fully realizing the benefits that targeted search provides. Ensure you optimize each strategy to its full extent before rolling back your spending or completely eliminating a channel from your advertising mix.

Consider How Your Customers Will React in a Recession

Woman choosing between two bags

Customers react differently during a recession. Not every client will shift their buying habits. Likewise, specific industries tend to be less susceptible to the impacts of a downturn than others.

So during this step, you’ll want to carefully analyze who your customers are. If your organization sells exclusively to consumers, you’ll want to understand their buying habits and income demographics. 

Customers most susceptible to the ill effects of a recession are the ones most likely to cut their spending across the board. They’ll tighten their wallets and refrain from purchasing items that aren’t basic needs. However, this may not be your target audience to begin with.

Your target audience may be consumers with significant savings and high incomes, customers that are likely to shift their purchasing habits. They may be more selective, but they won’t stop dining out and will still plan vacations.

Similarly, younger customers with less debt and obligations (like a mortgage, car payment, or children) aren’t necessarily guaranteed to roll back their spending unless they lose their source of income. 

You’ll want to perform a similar analysis even if you’re in the B2B sector. Depending on your offerings and the needs of your clients, you may find that a recession has little impact on your revenue. This is especially true if you have long-term contracts or sell to customers in recession-proof industries like transportation or health care.

Once you fully understand how your customers will react during an economic downturn, you’ll want to adjust your messaging accordingly.

Marketing to Consumers Who Don’t Stop Spending During a Recession

Let’s consider an example of Kids Wear, a hypothetical B2C e-commerce store that sells children’s clothing. Its clients are mainly middle-class and high-income, and it targets consumers across the U.S. and Canada. Its clothes are well-made but not necessarily luxurious. Kids Wear primarily relies on paid ads and social media marketing in its advertising campaigns. It also has a significant email and SMS subscriber list.

Since most of Kids Wear’s customers are middle or upper-class, it’s less susceptible to reduced recession spending than other sectors. Kids Wear can also count on regular new purchases since children grow quickly and will need new clothing regularly. 

Kids Wear’s marketing team notes that they receive the highest ROI from email marketing activities. However, social media helps generate brand awareness, and their Instagram ads regularly perform well.

As a result, Kids Wear decides to allocate more of its spending toward social media ads and email campaigns. The marketing team cuts down on paid advertisements through search engines in favor of creating a large following on Instagram. With this strategy, they plan to focus less on competing directly with other children’s vendors through Google Shopping and instead grow their following on social media.

Reaching Customers Who Hold onto Their Pocketbook During a Recession

Of course, not every business will be as fortunate as Kids Wear. Some companies will struggle to meet revenue targets, especially if their customers face potential job or income losses or if they operate in an industry vulnerable to recessions. However, all is not lost. 

Let’s consider another fictional e-commerce business. Markdown Electronics offers cheap laptops, PCs, smartphones, tablets, and other similar merchandise to customers. Most of the company’s clients are in the lower- to middle-income range and don’t have much access to credit.

Since its customers are more likely to diminish their spending during a recession, Markdown must be strategic in its marketing efforts. While electronics aren’t a luxury, most people require them for work and to stay connected with friends and family. They’re not quite basic needs, but they’re close — especially if an owned electronic item breaks. 

Markdown primarily relies on Google paid ads to showcase its merchandise. It also has a modest email and SMS subscriber list and occasionally runs ads on social media sites like Facebook. However, it sees its most substantial ROI from Google shopping ads. 

In this instance, Markdown should probably halt its spending on social media ads. Instead, the marketing team can create organic, free posts that appear on their follower’s news feeds. They should continue using Google paid ads to reach customers needing cheap electronics, and they can examine their past customers’ demographics and browsing behavior to target their ads better.

Finally, Markdown should regularly communicate with existing subscribers through email and SMS. Offering special discounts and flash sales may encourage past customers to purchase, even if they want to minimize their spending.

Put Your Content Marketing Strategy on Steroids

Infographic with key benefits of content marketing

Any marketer worth their salt knows how effective (and inexpensive) a carefully curated content marketing strategy is. Content marketing encompasses many activities, including blogs, how-to guides, and other informative items that help your customer base understand your offerings and answer their questions.

Beyond this, content marketing accomplishes several other marketing goals. For example, it can increase brand awareness and loyalty. Additionally, if you incorporate keyword research and topic planning, you’ll find your content marketing activities lead to higher levels of organic traffic on your website. Finally, content marketing also establishes your organization as a credible leader in your market sector.

Few companies can afford to ignore content marketing. It’s also an effective strategy for marketing in a recession because it’s affordable. You can produce your own content for free or outsource the job to qualified experts who can create it for you.

Content marketing is your best friend if your company is new or if you’re seeking to reduce your spending in preparation for a recession. As long as you follow a comprehensive strategy and take the time to create quality content that speaks to your target audience, you’ll see significant benefits.

Use Predictive Analytics to Understand Your Customer Base

Predictive analytics image

Predictive analytics takes ordinary data analysis to the next level — it’s the process of examining your customer’s behaviors and demographics to determine the likelihood of them taking a specific action in the future. While simple data analysis can allow you to make some guesses regarding future behavior, predictive analysis techniques allow you to make better, more data-driven predictions. Aside from simply reviewing your customer data, predictive analytics can combine machine learning and modeling to predict your client’s behavior.

There are several ways you can incorporate predictive analytics into your marketing efforts.

Customer Segmentation

Your clients probably don’t fit a single demographic or all have the same interests. With customer segmentation, you’ll carefully examine your customer base to understand which traits are the most common. You can then use the results to better target your advertising in a recession. 

For the best results, try cluster modeling. Cluster modeling will automatically identify the traits specific to your customer base. You may find insights you weren’t aware of that you can use to tailor your marketing campaigns. 

Model Your Target Audience

If your business relies on new customers to generate sales, you’ll benefit from predictive analytics that helps you identify prime leads based on your existing client’s behaviors and demographics. 

Facebook is known for its lookalike audience tool that considers customer engagement with your prior posts and ads to predict which consumers are most likely to respond to your marketing efforts. If you plan to continue your social media advertising efforts, you can better target your ads using lookalike audiences.

Consider Lead Scoring

Lead scoring involves using a scorecard that predicts where your customers are in the conversion cycle. To encourage them to move forward in the purchasing process, you can automate your messaging or prioritize your sales efforts to customers who rank higher in your scoring efforts.

For instance, you might retarget your paid advertisements to just individuals who previously visited your website. That way, you’re not spending money on consumers who are unfamiliar with your brand.

Personalize Your Messaging

There are several ways to personalize your advertising’s messaging. Think past standard emails that automatically insert the recipient’s name in the subject line. Instead, look at your customer’s browsing and purchasing behavior to better predict what they want.

For instance, a client who recently purchased a mattress from your store may be interested in auxiliary products like bedding, pillows, and a nightstand. You can send them emails advertising these items and provide a special discount or free shipping if they place an order.

Enhance Your Customer Segmentation Efforts

Infographic with market segmentation options

How well do you really know your customers? Can you identify their income brackets or their average age? Are they primarily male or female? What are their interests and hobbies, and what do they spend their money on besides your products? When are they most likely to read your email or visit your website?

You can easily answer those questions using data gleaned from prior interactions with your customers. These insights will allow you to segment your recession advertising efforts. You’ll be able to reach specific customers at the right time, and specifically those who likely will benefit from your merchandise.

To ensure you make the most of your advertising campaigns, develop unique ads for each of your customer segments. For example, if you own a jewelry store, you might display engagement rings to individuals in a relationship and wedding rings to engaged couples. You could also market your silver necklace collection to parents looking for a college or high school graduation gift for their daughters. 

You can follow the same process for your emails. Once you divide your subscribers into different categories, you can create specific emails designed for each segment. Audience segmentation is especially beneficial when some customers are less likely to suffer during a recession than others. This way, you communicate primarily with those who are more likely to make a purchase.

Maximize Your Local SEO Efforts

If your organization serves customers in a specific region, there’s no reason to spend your money on ads that aren’t specific to your area. Instead, use local SEO strategies to ensure local clients know you exist and can easily find you.

You’ll need to claim your Google Business Profile to benefit from this strategy. This will allow Google to show more information about your business on its maps. If you don’t claim your profile, you won’t be able to list critical information about your company, such as what you sell, your contact information, and opening hours. 

Once you claim your Google Business Profile, fill out all the requisite information about your organization. Make the most out of the space Google gives you to optimize your profile. Include lots of pictures of your store and merchandise. If you have a service organization, show images of your team helping clients.

You should also encourage clients to leave reviews on your Google profile. Businesses with positive reviews will benefit from better rankings in local organic search, which will translate to more customers.

Claiming your Google Business Profile is entirely free and highly effective, so if you haven’t already set up your profile, it should be a priority in your recession marketing efforts.

Showcase Your Products and Services Through Video

There are many ways to incorporate video into your marketing strategy, and you don’t have to spend a significant amount of your advertising budget. You also don’t need expensive cameras and audio equipment to produce a decent video. Often, a smartphone is enough.

The type of video you create will largely depend on the products you sell and the audience you’re trying to reach. For example, if you sell lawn care tools, you can create a video showing how your leaf blowers help people remove lawn debris quickly. You can share this video through your social media accounts, website, and YouTube.

You can use videos for instructional content too. For instance, a cosmetics company could create a series of videos showing people how to use their products or achieve a specific look with makeup.

The only limit to video production is your own creativity. If you don’t feel comfortable creating a video, you can always outsource the task to an experienced videographer.

Don’t Stop Advertising in Recessions

If you’re thinking of cutting your marketing in a recession, think again. Advertising is one of the main ways that customers learn about your company and its offerings. If you don’t spend money on advertising, your customers will slowly taper off, leaving you struggling against your competitors who don’t cut their marketing spend.

Think of recession marketing as your ticket to thriving during an economic downturn. As long as you perform the proper research to understand how your customers will react to a recession and adapt your strategies appropriately, you’ll see continued benefits from advertising. Remember, data is your friend. Harness it and focus your efforts on the marketing channels most likely to drive results.

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Sarah Edwards photo

Sarah Edwards

Content Writer @ Galactic Fed