Many industries have experienced a boom in business over the past 24 months, with profits at all time highs, and even the luxury of turning away business. However, the nature of the economy is cyclical, and recent shifts in the economy indicate we could be headed for an economic slowdown. No matter the impact, it pays to be prepared and take steps to keep your business recession ready.
According to Fortune.com, over two thirds of economists believe a recession is likely to hit in 2023.There are many factors in play here, several that impact the design and construction industry in particular, such as stock market volatility, increased mortgage rates, record low consumer sentiment, and historically high inflation causing price increases in both materials and labor.
Predictions on the severity of the coming recession vary widely among top economists. However, most agree that 2023 will see the US economy shrink to some degree. The ramifications for construction and design professionals could be significant, and many companies focus on tightening their budgets during a recession. Often, marketing is one of the first areas that face the chopping block – and this is a mistake.
Marketing During a Crisis
There’s an old saying:
“When times are good, you should advertise. When times are bad, you must advertise.”
Counterintuitive? Sure, it feels that way, but a century of research has proven that companies that maintain or boost their marketing and advertising spend during downturns and crises increase sales and market share.
Marketing during a crisis allows you to:
- Amplify your efforts. Many of your competitors will slash their marketing and advertising budgets, dropping the noise level. You can make a bigger impact on your audience – and because costs typically drop, you can do more for less.
- Project an image of stability and sustainability. This is incredibly encouraging to customers/clients in times when reassurance is hard to come by.
- Maintain “mind share.” It is essential that you stay at the top of your customers’ mind during difficult times. Mind share and “share of voice” (a measure of how dominant your brand’s voice is in your industry) leads to increased market share.
Exhibit A
During the “Great Recession,” which started in 2008, the construction and design industry suffered. There’s no other way to say it. From 2007 – 2012, the number of construction firms dropped from 891,032 to 743,452 – a decrease of 16.6%. Over two million jobs were cut; and as the world reeled from the downturn, consumers significantly curbed their spending on new builds, renovations, and remodels.
ACo, a design and remodeling company that specializes in kitchens, bathrooms, cabinets and flooring, chose not to maintain current advertising and marketing spending. Instead, ACo increased marketing spending. As other professionals cut back and pulled out, they invested heavily to increase visibility, improve reach, and bring in more business.
While some companies barely scraped by or closed their doors for good, ACo grew gross revenue 3.7x from 2008 – 2011. Marketing and advertising was the biggest single factor in their ability to not only weather that storm but to position themselves for future success. Today, ACo continues to heavily focus on marketing with a redesigned website, a consistent blog, and marketing tools such as their budget calculator and flooring visualizer.
Spend to Survive?
ACo is not an anomaly. When you focus on marketing and advertising during an economic downturn, you increase market share and profitability both during the crisis and after. A timeline of evidence:
- 1990s: Major companies like Jif and Kraft saw sales growth of 57% and 70% respectively during this downturn as a result of marketing efforts.
- 1980s: An analysis of 600 B2B companies found that those that maintained or increased marketing spending grew significantly during the recession and for the following three years. Aggressive advertisers grew 275% over those that pulled back.
- 1970s: The same was true during the severe 1973-1975 financial crisis: companies that increased marketing and advertising budgets saw growth during this period and years following.
- 1940s – 1960s: During the recessions of 1949, 1954, 1958, and 1961, companies that cut advertising spending saw their sales and profits drop. Those companies were also far slower to rebound compared to those that boosted budgets.
- 1920s: Companies that continued to advertise throughout the 1923 downturn grew by an average of 20% compared to pre-recession levels compared to a decrease of 7% for those that did not.
Marketing Survival with Haven
Keep the wheels of your business turning during any economic slowdown with Haven and a marketing survival kit customized just for you. Your marketing survival kit will include a mix of digital and print marketing strategies to help connect you with the right clients. We also offer a brand review and discovery with our marketing experts to develop clear messaging and get your business recession ready.
During a global economic slowdown or crisis, it is more important than ever to market your business and keep driving in revenue. Evidence shows again and again that maintaining or increasing marketing efforts is critical to surviving a recession, and Haven is here to help guide you. Connect with us today to learn more or get started with a custom marketing package designed to help your business survive any economic downturn.
