What Coronavirus Teaches Us About Marketing During an Economic Recession
The world is feeling the strain of the coronavirus pandemic. Families, businesses, and governments are struggling to survive the economic effects caused by COVID-19. As a digital marketing agency working with clients across many industries, we’ve seen and felt the impact first hand. It’s a difficult time worldwide, and global challenges often call for lean business strategies. Marketing isn’t usually the first thing on a company’s mind during a recession, but maybe it deserves more attention.
While it’s important to be mindful of budget constraints during times of scarcity, we’ve noticed a trend across several of our clients that we think is worth sharing.
CPC and CPM (on Facebook and Google) are generally down.
We see mixed results from our clients, but believe that these difficult times present some opportunity for well-positioned companies to acquire more attention for the same price and the data shows it!
Let’s take a look at the consolidated data for our clients across different industries.
It’s important to note that numbers tend to dip in January as companies pause their ads to adjust their budgets for the new fiscal year. Additionally, we’re constantly testing new ideas and optimizing our clients’ accounts, and some changes can be attributed to those efforts.
*Competitor CPC is skewed due to a large budget increase. We made significant adjustments to the Brand campaign in February, which drove CPC down.
*Real estate had a much steeper trend downward after a spike in cost during the month of February. We believe this may have been the realization by the real estate industry that they needed to move inventory quickly before economic uncertainty increased.
*This client did not run ads in January 2020, and did not run social ads.
The next few industries did not mirror the trend the same overall trend but still offer some valuable insights.
*We saw a large spike in a recruiting client’s CPC before it fell again. We infer this is related to increased unemployment rates as job seekers took to the internet to try to find work. We were able to reduce their cost again in April to slightly below January’s CPC.
*This client began offering fabric masks alongside their existing product line. CPC went up as a result. CPM stayed relatively low with a slight increase between January and February before increasing about $2 in April.
*This client’s CPM decreased month-over-month, whereas their CPC increased significantly until March before falling below January’s CPC in April. We believe this is due to Spring registration closing in February and Summer registration opening in March. Competing schools also opened registration and ran ads. Students had plenty of time to research their options and make a selection, leading to an increase in CPC.
What does this mean?
Companies worldwide are adjusting their budgets as they feel the effects of the economic recession caused by COVID-19. The first cost cut from most companies’ budgets is ad spend. Marketing during a recession is typically not a company’s first priority because they are focused on surviving.
Survival comes first and no company wants to resort to laying off or furloughing employees in a desperate bid to stay afloat, so “superfluous” costs are cut before their human resources are considered.
Despite all the innate challenges during a recession (or pandemic), our findings suggest that this may be the most cost-effective time to run ads. Because demand and competition are low, CPMs and CPCs are trending far lower than normal, meaning your ad dollars are worth much more than they were this time last year.
Forbes put out a great article on advertising during a recession in September of last year. They state that “advertisers that maintained or grew their ad spending increased sales and market share during the recession and afterwards.” Their reasoning includes taking advantage of reduced competition and the decreased cost of advertising, creating an image of corporate stability, and an increase in consumer awareness and “share of mind.” We encourage you to read the article, as they touch on some great examples of brands dominating market share because they maintained, or even increased their ad spend during a recession.
Do what works for you and your business.
If you can’t afford to keep advertising during the pandemic, then you can’t afford it. There are benefits to optimizing your marketing strategy and implementing creative solutions to rapidly evolving challenges. The bottom line is that you have to do what works for you, with or without a marketing budget.
It’s important to note that just because ad spend is lower, conversions aren’t always going to be cheaper. Depending on your industry and specific offering, it may not be the right time for your buyers. In general, both B2B and B2C buyers tend to avoid big purchases during recessions, so account for that in your marketing strategy.
Consider your unique situation.
Marketing during a recession is difficult, and there are several factors to keep in mind when formulating your marketing strategy. You should always consider your customer.
- Who are they, and how is this recession impacting them?
- Are they willing, let alone able, to buy?
- Is this a good time to reach them?
- Will they be able to buy a few months down the line?
- Is your offering necessary or useful during a pandemic?
Many healthcare companies are seeing unprecedented results. Mask manufacturers, sanitization service providers, and telehealth services are struggling to keep up with demand. Not all businesses are going to experience this recession this way, so plan accordingly.Depending on your answers (and several other factors), you should carefully consider how you approach your marketing strategy during the Coronavirus crisis.Stay positive!Things may seem difficult now, but it will pass. Given its timing and popularity at the moment, I find this salutation from Katrina, a recurring favorite in the Animal Crossing series, an appropriate send-off. We’ll see you next time.