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Are marketing budgets being slashed as recession looms?

ended 14. February 2023

Marketing budgets are often the first thing to be slashed during challenging economic times, so free PR platform, Newspage, asked marketers what they're seeing. Are firms putting their marketing on hold full stop, slashing budgets or even investing more heavily to gain market share?

9 responses from the Newspage community

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Chris Morledge
Managing Director at Copper Bay Digital
We have found that customers are still willing to invest in their marketing as long as they can see a clear ROI. Customers have continued to invest in monthly marketing and we have not lost any retainers in the past few months. We have actually seen growth across our clients. But it has been much more difficult to convince businesses to start new marketing activities. Clients have been reluctant to commit to any additional spend given the uncertain times ahead. When we talk to clients we use the same lines as before the talk of recession. Invest heavily in channels that can show a high return on investment, but you still need at least a baseline marketing activity across all channels to support those primary channels. One national client has increased their ad spend every month and has seen revenue growth increase monthly as a result.
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Ben Foster
CEO at The SEO Works
With lots of macroeconomic factors driving some pretty bleak forecasts, 2023 seems like it could be a challenging year for many marketers. When a recession is looming and times are tough, marketing budgets are often first on the list for the chop. However, this relatively short-term approach could harm things in the longer term. Though performance expectations should be adjusted, the return your marketing provides could be a make-or-break difference to your business. If cuts do need to be made, make sure they are in the channels with no measurable return on investment. Messaging and approaches should be adjusted to adapt to changing behaviours and sentiment, but hiding your brand away to save money could limit your own recovery.
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Minal Patel
Founder at Marketing by Minal
I work with a lot of small businesses and the temptation to slash spend on marketing at times like this is high. Some even decide to stop altogether. When I come across this, I tell them that marketing isn't like a tap. You can't turn it on when you need leads. Marketing has to be a constant drip, drip, drip of activity. When others are cutting back, you should be spending more time and as much money as you can afford on marketing.
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Tom Anderson
CEO at Hummingbird Agency
We're finding that the decision-making curve is a lot longer. Over the past few years, businesses have been quick to jump on trends but since November and December 2022 the time to get a response has almost doubled. They're thinking a lot more. Now is the best time to increase spending. While your competition is dawdling and being cautious, it can be the time to cash in. Demands for ad space are lower so you can gain customers at a lower CPA and gain a lot more traction. We have several clients reaping the benefits at the moment. They are being sensible and increasing spend on the channels that they know provide them with the best ROI.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
When the going gets tough... invest in marketing. We have increased out marketing spend 100% for 2023 as we know the cost to acquire new customers is set to increase. That means we need a smarter way of advertising and breaking through to clients to create trust and bring our brand to them. Strategic SEO, clever marketing ads and a great PR company, like Newspage, are key to getting this right.
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Steve McSherry
Head of Sales at Daktela UK
In my experience, companies always decide to slash marketing budgets when the going gets tough as it is often the simplest and easiest way of saving money. I am not sure it is always the right decision, as when a company has thought through and planned its marketing spend to support its sales strategy, cutting it can hurt sales and make the financial situation even worse. Current marketing conditions require companies to look at new ways of working, often using different marketing tools to encourage customers to increase their spending. We have customers of our own who are now investing in new ways of communicating with their customers. Getting the message across to these customers to explain the benefits of this new way of working is the responsibility of their marketing team at present and requires investment.
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Robert Bolohan
Co-Founder at Lotuly
Marketing budgets in the translation industry are being slashed and I can say this with 99.99% accuracy. We've seen a decline in requests for translation services across several industries and it doesn't surprise me in the slightest. One of the first things to be cut when a company is struggling is the marketing budget, everything that covers their ads, SEO, localisation, translation, PR even so it all goes down to stages and unfortunately due to this happening for over 1.5 months we are starting to feel the pressure from companies asking for discounts, reducing the number of documents they want to be translated, and some who are quite brave even go to the extent of using chatGPT for a mere $20 a month fee to write their content and then for a mere £0 per month using Google Translate will use it to translate their message. It's a no-no.
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Ian Humphris
CEO & founder at Nokamo
Marketers in this context are like turkeys when asked to vote for Christmas. There’s no point in stimulating short-term demand if it isn’t there: hayfever remedies in Winter spring to mind. For example, a restaurant chain client has seen demand dip and won’t be pushing against events outside their control. They have a strong balance sheet, a differentiated position and consequently a strong brand. As the economy recovers, so will their P&L: a rising tide raises all boats. Conversely, NOKAMO's client QUORN has benefited as they’re cheaper than meat. Increasing spend is a natural response to grow penetration and share. My encouragement to firms would be to put the economics ahead of activation and think about the big picture. Recognise the tortoise and hare fable where rushing to tactics and spending on performance isn’t the only answer.
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John Lamerton
Small Business Author at Big Ideas... for Small Businesses
I tell business owners until I'm blue in the face, not to cut their marketing budgets as we head into recession.

I show them data for the past eight recessions, showing that companies which do not slash their budgets make far more money than those who do cut - and see their increased market share remain in situ long after the economy recovers - while the "recession scaredy-cats" continue to lag behind.

Business owners understand this. They smile and nod when I explain it. They promise not to let fear cloud their judgement and slash their budgets.

And then, at the first sign of trouble, their knees jerk, and they follow the herd, cutting back at the exact time their marketing could be at its most effective.