As inflation soars, there have been talks about a potential recession looming on the horizon. The brands who will successfully weather this storm are already planning on how to cut spending, where to reallocate funds, and which marketing techniques they’ll use. But it’s not too late to start strategizing on marketing in a recession if you haven’t already!
Influencer marketing is one of the key strategies that will remain strong during a recession. Creators’ unique abilities to drive brand awareness and trust through high-quality, repurposable content are unbeatable.
Discover how creators can help you survive—and thrive—during a recession.
What is a bear market?
A bear market occurs when the stock market continues to fall over an extended period of time. If prices fall 20% from peak conditions, the country will experience a bear market.
Essentially, this means that people spend less, and businesses must streamline their budgets to avoid laying off employees or losing a significant amount of their profits.
While a bear market isn’t a recession, it can signal that the country is about to experience one if conditions don’t improve. In fact, recessions have followed bear markets 83% of the time over the last 50 years.
What is the difference between a bear market and a bull market?
The bear and bull markets get their names from how these animals attack—the bull charges toward its target with power, just like a booming economy moves quickly forward. Meanwhile, a bear drags its prey down, just as a bear market causes sales to decline, dragging many businesses down in the process.
Put more simply, bull markets are characterized by economic growth, while bear markets are characterized by falling profits.
How does a bear market impact marketing?
As profits dip and businesses prepare for a potential recession, they will often dramatically cut their budgets to reduce waste. Usually, the marketing budget is the first to go, as many business leaders don’t view it as an essential cost. That’s where they’re wrong, though.
Without marketing, a company’s falling sales can dwindle further, leading to a deeper economic impact in an already hard time.
But if marketers don’t have a say in the cuts and lose a significant portion of their budget, they need to review the data, cut out the channels and techniques that aren’t working, and discover more cost-effective ways to attract consumers.
“In any sort of economic downturn, the goal is not to stop marketing altogether. The goal is to hedge your bets on channels that are stable and successful. Influencer marketing does not have those same peaks and valleys that other digital channels have in a recession. It manages to maintain stability, which I think is going to be like the big proof point when we come out of this.” — Ali Fazal, VP of Marketing at GRIN
Are we in a recession?
At the time of writing in August 2022, we are not in a recession, but we are in a bear market. And based on America’s economic history, it is likely a recession will soon follow.
Understanding consumer behavior in a recession
Layoffs are common during a recession, and this can create a lot of fear. As a result, many consumers will dramatically cut spending, whether they lose their job or not.
There are four main types of spenders in a recession:
- People who abandon their usual brands for cheaper alternatives and cut out all unnecessary spending
- People who look for deals on their favorite brands but opt for more affordable brands if they can’t find discounts
- People who buy their usual brands for essentials but cut back on some splurge purchases
- People whose economic behavior remains relatively unchanged
Therefore, it’s important to see what category your products fall into—necessary vs. splurge; small purchases vs. large purchases—and what category your typical consumer falls into.
How to create a marketing strategy to weather a recession
Focus on data.
If you have a mature marketing program, you’ll have a lot of data on how each channel and technique you use performs. Analyze the ROI of each, and consider which of the lower-performing techniques you can either optimize, cut back on, or remove from your program entirely.
And with slashed budgets across the board, now isn’t really the time to dive head-first into new channels. Instead, focus on the tried and true to get you through this rough patch. And when economic conditions improve, feel free to begin experimenting and testing again.
Reallocate spending to strong marketing techniques.
Now that you’ve identified what works and what doesn’t, remove the weaker strategies and transfer the budget from those channels to your stronger, more cost-effective ones.
That can mean leaning more heavily on influencer marketing.
However, experts in the creator economy have noticed that some influencers are raising their rates in anticipation of a recession. If you don’t have the budget to keep up with these increases, consider partnering with smaller influencers.
Nano and micro influencers may accept free products or commission as a form of payment, which can lower costs significantly. That way, you only have to pay if your creator brings in sales.
If you decide to lean into paid ads on social media, make them as effective as possible. Creator licensing—the process of running ads through a creator’s account rather than a brand account—leads to more authentic content and better results. If this sounds interesting, review your creators’ branded content and see which pieces performed the best. Reach out to the creators and start negotiations to run these ads.
Cut out unnecessary costs.
Creating new content to promote your products can require an entire team, including writers, photographers, videographers, etc. When you partner with a creator, they fill all these roles, and they typically cost much less.
Skip the costly productions and reach out to creators whose aesthetics match your brand. Work with them to develop amazing posts, and be sure to get the content usage rights so you can repurpose their photos and videos on your social media accounts, in your emails, and on your website.
Target your messages to the right audience.
Remember those different types of spenders we talked about earlier? It’s essential to identify which category your typical shoppers fall into so you can adjust messaging and tactics.
For example, if your shoppers are looking for discounts on their favorite brands but are willing to settle for cheaper alternatives, consider working with creators to offer discount codes. These sales may help your consumers feel comfortable sticking with your brand during this downturn.
On the other hand, if your consumers are more likely to continue regular spending on essentials but cut back on luxuries, consider where your product falls. If it is more of a treat than a necessity, use messaging that can illustrate the benefit to the consumer.
Consider ‘buy now, pay later’ solutions.
If your products tend to be more expensive, consumers may put off purchasing from you until economic conditions improve. However, implementing a ‘buy now, pay later’ (BNPL) solution—like Klarna or Afterpay—in your checkout process can remove some of the stress from the purchase and help consumers feel more comfortable.
And with BNPL services, brands don’t have to worry about people faltering on payments. The service providers pay you in full at the beginning and handle tracking down late payments themselves. During a recession, BNPL services may mean the difference between a sale and an abandoned cart.
If you offer BNPL services, be sure to include this value-add in your marketing messages. Cash-strapped consumers may avoid looking further into products they think are out of their budget, but if they know from the get-go that you offer BNPL options, they may be interested in learning more.
Build trust with your audience.
Whether or not you’re offering an essential or a splurge product, consumer trust is essential. After all, people are trying to be more cautious with their money and don’t want to invest in low-quality items. And while you can talk about the benefits of your product, people won’t necessarily trust the biased language in a traditional paid ad.
However, they will believe their favorite creators. Not only can brand-aligned creators share the benefits of a product, but they can also give viewers a closer look at the item and show them what to expect.
When looking for creators to help you build trust, consider working with nano and micro influencers. They tend to have the closest-knit communities and large amounts of consumer confidence. Plus, they usually have much lower rates than macro and mega influencers, which is good for stretching your marketing budget as far as it can go.
You can also use relevant hashtags to find creators who already love and use your products. They can offer the most authentic endorsements, which is beneficial since 76% of consumers believe creators should have to actually use the products they promote.
Expand your audience.
As we pointed out earlier, many brands slash marketing budgets during a recession, but this can stop them from reaching new consumers and making sales. This also can mean that the marketing landscape is quieter than usual, giving active brands a larger share of voice.
This can be a great time to capture competitors’ loyal customers. One way to do this is by reaching new audiences. Diversify your creator mix to reach a variety of niches. In fact, 64% of people say they are more likely to follow a creator that shares similar life experiences or struggles.
Focus on creators whose audiences are mostly made up of people whose economic behaviors remain relatively unchanged by a recession. This group often includes younger consumers—especially those who do not have children.
And if you’ve noticed that creators previously posting about your competitors have stopped mentioning them, consider reaching out and proposing a partnership. If their followers see them begin to promote a similar product from your brand, they may assume your items are better.
Key takeaway: When marketing in a recession, influencer marketing can help brands stay strong.
Influencer marketing is a tried and true technique to keep in your recession toolkit. By partnering with creators, you can build brand awareness, trust, and value within key communities, which can help you weather the storm of poor economic conditions.
Frequently Asked Questions