In the world of business, much like in life, ups and downs are inevitable. Some of us enjoy the thrill of a roller coaster ride, such as the Incredicoaster at Disneyland. However, one roller coaster ride many business owners dread is the unpredictable journey of the economy, particularly in an election year in the United States. While the economy’s twists and turns can be unnerving, it’s important to remember that we’ve been here before, and we’ll be here after. Today, I want to share with you some crucial statistics, actionable tips, and personal stories to help you not just survive but thrive during these economic fluctuations.
Embracing Uncertainty: The Story of Starting a Business During Hard Times
Starting a business is always a leap of faith, especially during uncertain times. I can speak from experience—I launched my first business at the age of 23, back in 2002, just after the 9/11 terror attacks. At that time, the nation was grappling with fear, and many would have considered it a terrible time to start a business. Yet, my business partner and I were undeterred. We launched a regional course publication, confident in our contacts and skills.
Looking back, most people would have thought we were crazy, but we ran that publication successfully for six years. Not only did we grow it into a thriving business, but we also managed to sell it. Today, in 2024, that same publication is still in circulation, now on its third owner. The lesson here? There’s never a perfect time to start or grow a business, and the so-called “bad times” can often be turned into opportunities with the right mindset and approach.
The Perils of Cutting Back on Advertising
When economic uncertainty strikes, one of the first things businesses often consider cutting back on is advertising. But this is a mistake. The Ehrenberg-Bass Institute conducted a study that revealed a startling fact: if a brand stops advertising, its sales will fall by 16% after one year and 25% after two years. This statistic is a stark reminder that cutting advertising is not just a short-term savings—it’s a long-term risk.
Halting your marketing efforts might seem like an easy way to reduce costs, but it actually sets your business up for a bigger fall. When normal economic conditions resume—and they will—you’ll find yourself at a disadvantage, struggling to regain the market share you lost by going silent.
The Importance of Maintaining Your Share of Voice
In the midst of economic turbulence, it’s crucial to maintain, if not increase, your share of voice in the market. A landmark study by Binet and Field, “Marketing in the Era of Accountability,” shows that when brands increase their share of voice (i.e., their investment in advertising) above their share of the market, their market share increases as well. Conversely, if brands underinvest in their share of voice, they are likely to lose market share.
This principle underscores the importance of continuing to invest in your brand, even during tough times. By doing so, you position your business for growth when the economy rebounds.
Four Actions to Maximize Marketing Effectiveness
So, how can you ensure that your marketing efforts are as effective as possible, especially during challenging economic times? Here are four key actions you can take:
- Assess Your Marketing Strategy: Evaluate whether your brand’s marketing strategy strikes the right balance between sales activation and brand building. Both elements are essential, but they serve different purposes—sales activation drives immediate results, while brand building ensures long-term success.
- Invest in High-Quality Creative: Your advertising dollars should work as hard as possible. This means ensuring that your creative is of the highest quality. High-quality creative not only captures attention but also drives better engagement and conversion rates.
- Explore New Channels: Don’t be afraid to explore marketing channels outside of your usual strategy. In times of economic downturn, other brands may pull back on their advertising, which can lead to less competition and better pricing in alternative channels. This can be an opportunity to reach new audiences more cost-effectively.
- Leverage the Law of Supply and Demand: Economic downturns often lead to shifts in consumer behavior. While consumer spending might tighten, those who continue to market effectively can capture a larger share of what spending remains. The key is to be present and visible when your competitors are not.
Resilience in Action: How Shield Bar Marketing Grew During COVID-19
To illustrate the power of resilience and smart marketing during tough times, let me share one more story. When COVID-19 hit, it devastated many businesses. However, my business, Shield Bar Marketing, experienced something quite different—we grew by 81% in 2020.
How did we achieve this in such a challenging environment? It came down to a few key factors:
- Exceptional Customer Service: We prioritized providing excellent customer service. By being there for our clients and helping them navigate their own challenges, we built stronger relationships and trust.
- Strategic Brainstorming: We didn’t just react to the crisis; we proactively brainstormed with our clients on how they could adapt and even thrive in the new reality. This proactive approach led to innovative solutions and new opportunities for growth.
- Prompt Execution: We didn’t just talk—we acted. Prompt execution of our strategies ensured that our clients saw immediate benefits, which reinforced their trust in us.
Meanwhile, another agency in our space, serving a similar market, chose to take a different approach. They decided not to take on new clients and, as a result, were forced to sell their business. We ended up buying them.
This story highlights the importance of being aware of what others are doing and finding ways to do it better. By being more strategic, more thoughtful, and more customer-focused, you can turn even the most challenging times into periods of growth.
Navigating the Economic Roller Coaster: Final Thoughts
The economic roller coaster isn’t going away—it’s just part of the business landscape. The economy will go up, it will go down, and the headlines will make us all a little crazy from time to time. But through it all, the key is to stay focused on what you do best and continue to invest in your business’s future.
If you’re feeling uncertain about your business strategy and want to explore how Shield Bar Marketing can help, I encourage you to book a discovery call with us. We’re here to help you navigate the ups and downs and come out stronger on the other side.
And remember—you’ve got this. You’ve been through tough times before, and you’ll get through this one too. Keep pushing forward, keep innovating, and keep believing in your business.
FAQs
Is it a good idea to start a business during an economic downturn?
While it may seem counterintuitive, starting a business during an economic downturn can actually be a good idea. With careful planning, a focus on customer needs, and a willingness to adapt, you can find opportunities where others see challenges.
Why is it important to maintain advertising during a recession?
Maintaining advertising during a recession helps prevent your brand from losing market share. Studies show that stopping advertising can lead to significant declines in sales over time, putting your business at a disadvantage when the economy recovers.
What is the share of voice, and why does it matter?
Share of voice refers to the amount of advertising your brand does compared to your competitors. Increasing your share of voice during tough economic times can help you capture more market share and position your business for growth.
How can I make my marketing more effective during an economic downturn?
To maximize marketing effectiveness during an economic downturn, ensure your strategy balances sales activation and brand building, invest in high-quality creative, explore new channels, and leverage shifts in consumer behavior.
What should I do if my competitors are cutting back on marketing?
If your competitors are cutting back on marketing, this can be an opportunity for you to increase your presence and capture more market share. By continuing to invest in your brand, you can set yourself up for success when the economy recovers.
How did Shield Bar Marketing grow during the COVID-19 pandemic?
Shield Bar Marketing grew during the COVID-19 pandemic by providing exceptional customer service, brainstorming innovative solutions with clients, and executing strategies promptly. This proactive approach allowed us to thrive while others struggled.