Recessions feel like one-in-a-million events when you live through them, but, in truth, they’re a dime a dozen.
There have been 47 recessions in US history, including eight within the last 50 years. Each recession has led to a recalibration of the economy, resulting in the shuttering of some businesses and the flourishing of others. So what sets apart the winners and the losers of an economic downturn?
As research from Harvard Business Review found, “Only a small number of companies—approximately 9% of our sample—flourished after a slowdown... outperforming rivals in their industry by at least 10% in terms of sales and profits growth.”
These companies were quick to cut costs and focus on “operational efficiency,” but, crucially, they were also quick to “invest relatively comprehensively in the future by spending on marketing, R&D, and new assets.” To flourish in the wake of recession, it isn’t enough to batten down the hatches—it’s necessary to turn the downturn to your advantage and invest in future growth.
This can feel counter-intuitive, but even in the midst of a recession, growth opportunities exist.
Paid advertising is one of the biggest variable costs in a company’s marketing ledger. When hard times hit, freezing paid spend can be a useful way to quickly reduce expenditure and prioritize core expenses.
But as other companies tighten their purse strings and withdraw their spend, advertising costs for any remaining advertisers plummet. As marketing agency Primer recently reported, “We have seen a 23% decrease in CPMs across our partners’ campaigns in the past 7 days. Individual brands have seen CPM decreases as much as -40% in the past week.”
For the time being, paid advertising has the potential to be cheaper and more cost-effective than ever. As millions of people shelter in place, Facebook has reported record-breaking use across all of its apps, with more people—from a wider array of backgrounds—using social media.
“People who don’t regularly use these platforms are turning to them for updates and social connections. . . we’re seeing this play out in increased engagement — link clicks and comments are increasing.”
Primer
While enterprising B2C companies are leveraging paid advertising to realize record-breaking revenue, the benefits extend to B2B companies too. It’s possible to run cheaper-than-normal experiments to refine ad messaging and audience targeting for future use, and lucrative to run paid ads to a gated resource—like a webinar or an ebook—to generate email sign-ups.
The impact of an economic downturn ripples outward for decades, precipitating lasting shifts in consumer behavior. The biggest winners in a recession are typically those companies that preempt one of these shifts and position their company to take advantage.
In the same way that AdEspresso capitalized on the emergence of social advertising platforms, and Zuora rode the wave of the “subscription economy,” now is the time to ask: what will the post-COVID economy look like? Many companies are already making their bets and using thought-leadership content to stake a claim over the future:
Now is the time for creative plays. Where does the first-mover advantage lie? What marketing messages and search terms can you own now, in preparation for a future where they’re more popular and lucrative?
Event marketing is crucial for a host of B2B companies, with some even depending on a single industry conference—like SaaStr or the Mobile World Congress—to fill their pipelines. But with events on ice for the foreseeable future, many companies are struggling to find a suitable replacement.
Content marketing can help to fill the void left by in-person events:
In some cases, the switch from intimate and costly in-person events to online web formats makes it possible to reach a larger audience:
“What I am seeing is that virtual events are outperforming live events with regards attendee numbers.
Karl Mc Carthy, commercial lead at Tito
The fact that we are all stuck at home is a contributing factor and organisers will need to transition off Zoom to more suitable platforms before the format gets tired.”
Content can also achieve some of the second-order benefits of events. Conferences and meet-ups are chock-full of fun, serendipitous moments that help create meaningful, human connections between brand and attendee. To approximate some of this benefit, many companies are using content in novel, unexpected ways—like Auth0’s Zoom backgrounds or Deel’s work-from-home playlist.
While there’s no substitute for face-to-face connection, creating content that’s designed primarily for enjoyment can prove to be a surprisingly powerful marketing tool. Case in point: Degreed’s activity book for children was the first touch point for most of the company’s April leads.
A swath of industries, from home cooking to health and wellness to ecommerce, are experiencing a sizeable uptick in organic traffic. As Cloudflare reports, there are simply more people online right now, resulting in many countries seeing a 30-50% surge in total monthly internet usage.
In these industries, doubling down on search content to meet demand is a smart decision. Even in industries likely to experience a downturn in demand during a recession, investing in SEO still makes sense. We’ve talked often of the compounding nature of search content: articles created now generate visitors, leads, and customers for years into the future.
“Even a handful of evergreen posts can deliver consistent traffic for several years. A site with 20, 30 or 50 evergreen resources will outpace a site with thousands of non-evergreen articles.”
5 Content Marketing Power Laws
Any budget invested now, during recession, will yield a much larger return on investment in the months and years postrecession. This is especially true when your competitors have strayed from search content and paused their own marketing efforts: your slight head start can lead to an insurmountable moat of ranking keywords and new backlinks.
Any company that doubles down on search earns a competitive advantage, reaping the rewards in 6-12 months, when competitors are scrabbling to regain traffic.
Tough times call for tough measures, but companies need to avoid a myopic fixation on cost-cutting. As HBR discovered, “Firms that cut costs faster and deeper than rivals don’t necessarily flourish. They have the lowest probability—21%—of pulling ahead of the competition when times get better.”
When recession hits, long-term success is predicated on your ability to see through the “fog of war” and identify the growth opportunities that lurk within an economic downturn.
