Marketing Tactics For Hard Times
How to Survive When Economic Crises Change Everything About Value, Trust, and Demand
Look, I’m no economist, but it doesn’t take an expert to recognize that the current geopolitical macroeconomic situation isn’t exactly ideal for just about anybody right now.
This isn’t a political blog, you have plenty of other options if that’s what you’re looking for. What this is, though, is a world-class marketing blog, and I firmly believe that Economics is to Marketing what Physics is to Engineering. That is to say, Economics is the general realm of theory within which marketers practice.
If you do work in marketing or a marketing-adjacent field and find yourself somewhat “underread” on Economics, I highly recommend Ha-Joon Chang’s Economics: The User’s Guide.
All that is to say: You, as a marketer, are not exempt from domestic or international politics (if you’re not a marketer you’re still not exempt). Not only does the state of the working and consuming classes in the world directly affect your and your client’s bottom lines, but how the general public thinks about certain issues will also factor into what kinds of messaging and framing resonate with them.
Okay, you’re a big kid now, time to rip the Band-Aid off.
If you haven’t been paying attention to the recent turmoil in the Middle East or nervous whispers about the US domestic economy, you may want to start now. I will give you the criminally short and politically-tame version. Disruptions in oil markets, coupled with a softening jobs picture, have put stagflation back into the conversation in a serious way. If things continue to progress as they are, this is what we’re staring down the barrel of.
What I’d like to do today is prepare any marketers or business owners reading this for a potential economic downturn and outline historic ways in which companies have weathered previous storms. From cheap moviegoing and radio during the Great Depression to the rise of streaming-era habits during and after the Great Recession, when consumers are strapped for cash, their habits may change, but they change in predictable ways.
Economic downturns don’t simply reduce overall demand, they completely reorder competitive fields.
To just bluntly state my thesis: It is tempting, during economic hard times, to put marketing spend first and foremost on the chopping block. Today I’d like to make the case that this is very often the exact opposite of what businesses should do and that there are compelling reasons for maintaining or even increasing marketing spend, even when your financial future looks highly uncertain.
Put simply, the elements that make up my theory of successful downturn marketing are:
As competitors retreat, customer attention becomes cheaper.
Consumers become much more value-sensitive when money is tight.
Marketing, if seen as a measurable investment rather than a money-pit, can improve a firm’s market share.
There’s more, but let’s start with that for now.
If you can resist the urge to panic when the news anchors do, if you can stay aware and educated on the macroeconomic trends, not only can you weather the storm, you can make the storm an updraft that takes you to new heights.
Recessions as Market-Share Capture Opportunities
This section is morbid, I do admit.
To quote Brad Pitt’s character in The Big Short,
“For every 1% increase in unemployment, 40,000 people die.”
In that spirit, if what I’m about to explore does help you, do not dance.
Now…
Recessions can happen for all kinds of reasons, but setting that aside, one thing that is not up for debate is how consistently capitalism produces periodic contractions. Roughly speaking, every few years, we discover some new and exciting way that our futures have been poorly gambled on.
Downturns happen, and when they do, the knee-jerk reaction is belt tightening. For those unlucky enough to be passed over for a government bailout, cuts, layoffs, and various other forms of retrenchment are the logical first step. That is, unless you’ve given the problem more than a few minutes of thought.
Business reactions to economic downturns come in one of two flavors: Indiscriminate budget cuts and strategic perseverance.
You should endeavor to be the latter.
When budgets get tighter, the words on everyone’s lips are “waste” and “excess.” Usually this manifests in workforce reductions, input quality reduction, or a rollback of “frivolous” expenditures (don’t laugh!) like marketing.
To paraphrase my mother, if all of your competitors jumped off a bridge, would you?
If everyone else is cost-cutting by reducing marketing spend, that is an opportunity. During economic downturns, there is still the same broad amount of eyeballs in your market, they just get cheaper to rent as your competitors exit, which, in a blunt, almost primal way, is all advertising is.
When your competitors panic and cut their marketing spend, the relative cost of attention in their markets falls. If you maintain, or even increase, your marketing budget, you can capture far larger shares of said market relative to when it was more crowded.
Less ad competition means bids get lower so you get more distribution for less money. Even if you keep your marketing budgets exactly the same, your brand visibility relative to the market will increase.
During economically hard times, if a business is asking itself whether it would be helpful to cut their marketing budget, I can say with near-absolute certainty that they’re not doing marketing right.
This is not financial advice, but this idea that you should double down during downturns does have parallels to the investment world. If you keep some of the returns from your investment portfolio liquid, then a sudden drop in prices becomes an opportunity rather than the end of the world. By tapping into your reserve liquidity, you can greatly increase your holdings for cheap.
Importantly, in the exact same way as economic downturn marketing, if you increase your share holdings while shares are cheap, when things eventually rebound, you will be in a far better place than you were before the crisis began.
In that same vein, discontinuing your marketing spending during a downturn forfeits any of this advantage you have have had to those who stay in. It’s like selling your stock at the low and then trying to buy your shares back after the price rebounds–“paper hands,” as the kids say–getting back to your old position is going to cost a pretty penny.
A useful contrast here is Kmart versus Audi in the years around the 2008 crisis. Kmart kept sinking deeper into retail decline, while Audi continued building brand momentum and market share. I leave it as an exercise to the reader to remember which brand they’ve seen around town most recently.
Okay, so far I don’t think I’m being too fantastical here. This all strikes me as very logical and empirical, as everything I write is.
Let’s continue.
How Economic Hardship Changes Consumer Psychology
When times are good, it feels like the good times will never end. The same can be said for the bad times, unfortunately.
When the future looks bleak, the way people see the present changes too. What once were creature comforts begin to look like irresponsible overindulgences. The places and things that make up a person’s day-to-day hobbies and activities are shown in a new light and have to be freshly evaluated.
The only reason this should scare you is if you sell low-quality garbage. But my readers don’t sell low-quality garbage, so there’s nothing to fear here.
When consumer spending shrinks, purchasing habits shift toward high-value, high-security, high-practicality commodities. This is deeper than a commitment to only buying the necessities, it’s a floor-to-ceiling reassessment of value and it affects broad customer behaviors in all kinds of deeply fascinating ways.
To the DoorDash addict, that 10% delivery fee starts to look a lot more painful than grocery shopping and when they go to the grocery store, they’re not just buying the cheapest option, they want the best option for the best price. Junk food, even if cheap, looks like an unaffordable luxury.
Some people might give up their gym memberships, but fully commit to living a healthier lifestyle at home instead and search for ways to make that lifestyle easier.
More people take public transportation instead of their cars to save on gas, meaning more eyes on subway and bus ads and less on freeway billboards.
People may forego an upcoming vacation, but at the same time, a $20 movie ticket that at one time may have seemed laughably expensive now looks like an amazing deal if it can entertain a person’s kids for the day.
It is myopic to simply think that because people have less money in their pockets they give up all their wants in favor of a strict need-only diet. Rather, what history shows is that in times of economic turmoil, people reassess their spending priorities instead of reducing their spending uniformly. Even in hard times, entertainment and small “guilty-pleasure” purchases often survive. They just have to clear a higher bar of justification.
Consumers during economic downturns want fewer unexpected surprises in the products they buy. The things they justify spending money on have to be defensible financially or morally. It is only under strict market contractions that the “rational consumer” asymptotically approaches rationality.
Messaging built on conspicuous consumption, excess, vanity, and spectacle, that may have once gained traction now appear nauseating (for some people, this sentiment is universally true).
You will succeed if your messaging adapts to these changing mentalities. In good times, a person may want most of all to feel enabled to express their individuality through their purchase choices and will pay a premium for the ability to do so. In bad times, what matters most is safety, security, and control.
Emphasize quality inputs, durability, long-lasting benefits, or the fairness of a price point and you will become the safe, rational choice.
My apologies if you sell Labubus. You’re not going to make it.
The 4 Pillars of Successful “Economic Downturn Marketing”
Like a balding man who shaves his head, strategy exists, even in recession.
To drive the point home and make these adjustments in thinking easier to remember, I’m going to outline 4 operational pillars that hold up my argument that when the economy dives, the marketer thrives.
The topics these pillars span are budgeting, pricing, focus, and tone.
Pillar 1: Budgeting, the Virtuous Pursuit of Rigorous ROI
If your current marketing is being done correctly, then your advertising can function as a revenue stream, not an expense. Cutting your marketing budget to improve your company’s margins is like cutting your electricity bill to be able to afford fancier lamp shades.
I want to emphasize that I’m not just fetishizing marketing because that’s the lens through which I’m viewing the problem. Well, I guess it could be, but I’m trying not to consciously!
If your ads are bringing in proven profit and that profit is greater than your spend, then you’d have to be crazy to offer it up to the chopping block.
The assumption here is that if your ad spend ROI is being tracked accurately, your marketing is a different kind of beast than your other expenditures. It makes money for you or else makes it very easy to delete that which is not. That is why I harp on this point so much in these articles. If, in a downturn, your business is reviewing the cause-and-effect visibility of expenditures, and your marketing is being properly attributed, then it shouldn’t even enter the picture.
If you wanted to begin preparing for a possible downturn today, a good first step is to ensure that your ad attributions are accurately tracking KPIs that contribute to your bottom line directly; not just “vanity” metrics like likes and follows. You should have strict, borderline ruthless, rules in place for how successful an ad should be to avoid getting culled when you optimize. You should have a clear delineation between your testing budget and your static spending on previously proven “golden” ads with consistently high ROAS figures.
If you have this system set up, then in the event that your marketing budget does come into question, you’ll have, at the very least, a much better picture of what you’re actually losing should you decide to send it to a “farm upstate.”
Pillar 2: Pricing, Try Value Adds Before Price Cuts
Any first-year Econ student can tell you that if you want more customers, you should lower your price. In the Marketing world, this is a kind of zombie-marketing, something only an automaton could really believe.
The notorious marketing influencer Alex Hormozi famously insists that there are only three kinds of business problems: you don’t have enough customers, you’re not retaining your customers long enough, or you’re not making enough per customer.
Notice how lowering the price of your goods doesn’t directly address any of these problems. The popular understanding is that the majority of people who choose a competitor’s product or service over yours are doing so out of a purely rational cost/benefit analysis. If you’ve read any of my previous articles (or paragraphs), then you know how I feel about this neoclassical economic assumption.
The truth is that customers make purchases with their gut rather than their brains much more often than we’d all care to admit. It’s not precisely that your lost prospects are going with a cheaper option. What is more likely is that they are going with options that appear more valuable. Notice how “price” is not something intrinsic to a commodity, no microscope of any power or size can tell you the molecule that determines price.
Value, without getting too into it, is a socially and qualitatively determined phenomenon and can come from any of the manifold aspects of a commodity. A competitor could be geographically closer to the customer and therefore have more value, their product could use better quality inputs, a customer could identify with their brand story more, they might have been recommended by friends or family, the list goes on and on. Very rarely is the deciding factor simply “this option is the least expensive.” Usually the thought is more like “this option is the fairest trade of use-value for my money.”
Lowering the price of your goods and services not only doesn’t address your financial woes, it can actively make them worse. Price is a major deciding factor in how a customer assesses the value of your goods and services. This is an important part of what is known as “positioning” in the marketing world. If you price yourself as “the inexpensive option,” then you may get more customers quantitatively, but qualitatively, you will be perceived as “the cheap option.”
During times of economic hardship, people do often go with cheaper options or cut back on certain kinds of spending, but if your product or service addresses a real problem in someone’s life, that problem doesn’t go away just because the economy tanks. They just have to rethink how big of a problem that problem really is and if it is still a thorn in their side, they’re going to rethink the value proposition of the various solution options available to them.
Instead of rethinking your price, rethink how you are conveying your value.
If there are opaque parts of your production process or service costs, make them explicit, and explain why exactly your offer costs what it does. If there are many different aspects to your product, consider unbundling them, selling them piecemeal. This does have the effect of lowering the price, but it should also lower your labor and/or material input to match. Reframe the story around your offer such that what it does for the customer, and what it does differently than your competitors, is front and center.
Your customers, even in hard times, will continue to have the problems your business addresses. If you touch your price point, you are putting the perceived value of your brand or offer in danger. Adjust your pricing strictly as a last resort and only afteryou’ve tried stripping away ambiguous add-ons, making its unique benefits more explicit, or considered additional guarantees or protections.
Any business can lower their prices, but if anyone can do it, it’s probably not a good marketing strategy.
It’s a good thing you’re not just any business.
Pillar 3: Focus, Loyalty Over Conquest
Just like the sociological thought experiment of the “tragedy of the commons,” if nobody is looking out for the good of the environment as a whole that a group of people is operating within, eventually that environment withers and disappears. When everyone acts purely out of their own immediate self-interest, everyone suffers.
(It’s a good thing Ayn Rand acolytes can’t read or write or that last sentence might be considered controversial)
It may seem like I’m revealing my more pinko, hippy-dippy sensibilities here, but my argument here is not a moral one.
I’m not saying you need to transition your business model to a cooperative one, I’m almost positive such a thing isn’t possible. I’m saying that keeping your gaze zealously fixed on competitive acquisition at any cost can ruin your reputation in the market. You want to be seen as the option that cares rather than the option that will make any deal you need to in order to get the sale. These kinds of compromises for the sake of sealing the deal paint your entire pricing model as facade.
I see this done a lot in sales. From the individual salesman’s perspective, “I talked to my manager and we can knock 10% off the price” helps them personally, but it is damaging to the brand’s reputation as a whole.
My wife and I were in the market for a new mattress lately and, to make an informed decision, we decided to try some out across a few different stores. At the first store we went to, an eager sales rep threw statistic after statistic at us until we finally caved and sat down to hear their pitch. I insisted over and over again that I was not going to make a purchase until I’d tried more mattresses and was strictly auditing their’s. Every time I did so, miraculously, the sales rep found a loophole that allowed them to lower the price a bit more. The harder I insisted we were not going to buy, the lower the price fell. Every time it did so, my reaction, rather than being one of joy or increased interest, was one of offense and distrust. “If you can sell the mattress for a lower price and still make a profit,” I thought, “then why have you marked it up so much?” I know, logically, that the company wouldn’t authorize the sales rep to sell it at a loss, so as we talked, I became more and more curious what is the real value of the mattress was. If there were some breakthrough manufacturing technology that let them fabricate mattresses for pennies on the dollar, they’d be advertising it already. Instead, all the marketing material around the store seemed to indicate advancements in sleeping technology that would indicate a higher price, not lower.
Were these mattresses made of cheap material being sold to suckers at top-shelf prices? Was this brand not as reputable as I’d been led to believe? Why did they seem so desperate to stop me from trying other mattresses? Did they have that little confidence that they would sell me it at any price just to stop me from going elsewhere? My spinal health is worth more than that. The whole ordeal made me feel like an unwilling pawn in a game I never signed up to play. I certainly didn’t feel like my problem, my time, or my opinion were being valued.
In the end, even though this particular store’s final offer ended up being the least expensive one, I ended up happily paying more for a different brand of mattress; one that I valued more. The first store’s constant undercutting of their own prices betrayed the true value of the product and thus their true feelings towards me as a customer.
During normal economic times, some people like haggling, some people don’t; this model caters to both. During bad economic times, most people respond more like I did. Let’s skip the song and dance and you can just tell me if I’m going to wind up with a spring in my back after a year or not, I’ll judge the price from there, and we can both get back to our lives.
If your price can shift, you come across as shifty.
Your product or service needs to come across as beneficial to your customer base as a whole, uncompromisingly. Your price point should be solid as a rock, as previously discussed, but beyond that, it should also be fair and defensible. You should know the profit margins of every manufacturer and middle man that touches your inputs from the moment they come out of the ground to moment they go in your customer’s mouth.
If your customers feel like you are caring for them, like you’re not trying to rip them off at least, they will choose you and keep coming back, even in times of economic hardship. You should really only aggressively intervene when highly profitable, but at-risk, customer segments are on the line. Your branding should be honest enough and your price point defensible enough to convince the rest.
It’s not worth it to bend your values trying to appeal to everyone. You’ll end up appealing to very few. A better tactic is to aim at fairness, presenting a high-value service for those customers who value a high-value service. Doing so may net you fewer customers, but the ones you retain will be willing to patronize you more often, and be more willing to consider your premium options when they do.
There’s a great line from the movie Supertroopers that I always come back to:
“Desperation is a stinky cologne.”
If your goal is to dominate the market, to make the sale at any cost, then you will pay any cost. However, if you’re transparent, fair, and unflinching on your pricing, your customers will feel respected and respect you more in turn.
Pillar 4: Tone, Aligning Psychologically
A successful advertisement for your product or service conveys an argument to prospects. It should lay out the pros and (in a strategic way) the cons of choosing you. The form that this argument takes matters every bit as much as the content.
That’s a heady way of phrasing something very simple to grasp: Your offer can be portrayed in many different ways, from many different angles, for different kinds of people, without the offer itself changing.
When a prospect weighs the argument explicitly or implicitly laid out in your advertisements, they perceive the manner in which the argument is structured long before they consider the points the argument is making.
If a customer is browsing the fruit isle, and a store rep launches into a rehersed speech about what a little lime juice does to guacamole, most people’s first thoughts are not “Wow, that’s a really good point.” It’s probably more like “Ah, I see, they’re trying to get rid of their excess lemons or avacados before they go bad” or even more likely “Why is this person yelling at me about lemons?”
When a prospect listens to your pitch, the recieve not only the pitch’s content, but the form it takes and the context it arrives to them in. Your pitch mixes with their psychological baggage from the other parts of their life, it gets unintentially linked with however they’re feeling in that moment. The same exact offer, phrased slightly different, in a different place, can come across as self-care or over-indulgent, a great bargain or a cheap knock-off, the classic choice or an obsolete option.
When inflation or unemployment, or both, make it harder to make ends meet for people, their psychology changes. The way they see the world changes. The same messages can take on new dimensions.
The point I’m trying to make here is that it’s not just purchasing priorities that change during economic downturns. A society’s decision-making framework fundamentally changes.
When people’s financial backs are against the wall, they look for confirmations of value, trust, security, and usefulness for more fervently than they do when they have financial breathing room.
The way you speak to your prospects and outline how your product or service fits into their lives should take into consideration the unease they likely feel about their life in general. If you can empathize with them, you can get ahead of their concerns. Don’t just mention that your service is dependable, show proof, give assurances and guarantees if necessary. Don’t make your customers do the annoying work of comparing options, gather the info for them! If there are cheaper or more expensive options than yours, good! Explain why they are! Show authentic reviews or video of customers using your product or service in their day-to-day lives. If you can do this through UGC rather than paid media, even better.
Position yourself as trustworthy and transparent. Show, don’t just tell, that your product or service is pragmatic and has a genuine social reason for existing, not just that it is how you make your money.
Keep in mind that your customers likely feel incredibly anxious over every purchase, don’t glamorize excessive consumption or enjoyment. Don’t imply that you are the “easy choice,” or that any choice is easy, because this implies a person is foolish if they’re anguishing over their spending habits. Don’t rely so heavily on the standard methods of urgency and immediacy. Those factors are probably already present and in far more serious ways.
Keep all this in mind, but do your best not to confuse empathy with sentimental softness. Remember, your product or service solves a real issue and does so fairly, you are trying to help the best way you know how, no gimmicks. That also means that you can not, will not, budge even an inch on price.
And if your business fundamentally incapable of doing these things, then I wish you and your Labubus all the best. Enjoy the farm upstate.
The “Downturn Marketing” Flywheel
Prepare for trouble. Make it double.
In A Paradise Built in Hell by Rebecca Solnit, it is observed that during times of great hardship or tragedy, societies become more cohesive than ever. The old symbolic order is set aside in favor of one that feels more deeply social, more deeply human.
I believe it is beneficial to keep this understanding in mind, not just during hard times, but during good times as well. Yes, your competitors eat a portion of your market share, but not because they are evil, because they need to afford food too. It is likely you are both trying to do the same thing, and that is solve a problem that matters to you while making your own life a little easier at the same time.
If you keep your eyes focused on that reality, then transitioning into Downturn Marketing should be second nature.
If your message needs to adapt to changing mentalities, if you are paying attention to how the lives of your customers change, your corresponding adaptations should be very clear.
You can start making preparations today.
Put as simply as possible, your plan should be: Rethink your offer framing to be value-forward, prioritize customer retention over acquisition, and endeavor to make your messaging as empathetic as possible.
Put in a way that’s better for my SEO, your plan should be:
Create a minimum viable always-on brand presence.
Define what metrics will trigger spend shifts.
Map offer tiers and fallback packages in advance.
Identify high-value and at-risk customer cohorts.
Prepare alternate messaging libraries for fear, caution, and practical value contexts.
Review price architecture for fairness and clarity.
Coordinate marketing, finance, operations, and customer support so that promises match delivery.
Diligent measurement helps you optimize ad budgets, optimized ad budgets mean clearer ad messaging, clear ad messaging is empathetic ad messaging, demonstrating empathy builds customer trust, a trusting customer is a retained customer, better retention means better margins, better margins help you weather an economic storm.
It starts with diligent measurement today, and the intestinal fortitude not to slash that marketing budget indiscriminately, regardless of how panicked the Wall Street investors on TV might appear, tomorrow.
Gazing into an Oil-Filled Crystal Ball
If times of economic crises reveal anything, it is how well businesses really understood their customer bases in the first place. When the dust settles, the ones still standing are those with the best understanding of the value they provide, those who stood by that value rather than compromising or fleeing entirely.
Here I’ve given you the logic and a gameplan, but I won’t be there to tell you when to put them into action (unless you hire me, of course).
No, for that, you’re going to need to do the unthinkable: Pay attention to global politics.
In the coming months, further damage to oil production infrastructure may impact oil derivatives markets, increasing manufacturing inputs, transportation, and the consumer-side prices for goods and services across the economy, and likely keeping those prices elevated until such a time that oil production, reserves, and shipping flows normalize.
We are already seeing the beginnings of a price shock from these events. These events, once set in motion, cannot be stopped.
In the spirit of the last edition, we can think strategically about this rather than despair. If the economy remains as it is, focused on oil-based production of energy and manufacturing, then price shocks are likely to remain a serious risk for as long as the underlying disruptions persist.
There is, however, another option.
If you’re following macroeconomic news, you already know solar costs have fallen dramatically while efficiency has skyrocketed over the last few decades, and major energy analysts expect solar to continue expanding.
If you understand Economics to be the study of the sandbox in which Marketing plays, then you might want to start thinking about how global conflicts, trends, and reactions to both changes the rules of the game or reveal new ways of thinking, and how those new ways of thinking factor into your production lines and customers’ lives.
“From a situation in which nothing can happen, suddenly anything is possible again.”
Mark Fisher
If you are looking for a silver lining in these bleak times, might I suggest that one.
Until next time, stay fresh.
- Casey