Marketing budgets are being squeezed and shrunk and scalped.
The cost-of-living crunch has forced many people to keep the lights off, use Afterpay to buy groceries (the cost of food and non-alcoholic drinks jumped 8% year-on-year in February), and battle with skyrocketing interest rates (you only need to look at the Reserve Bank’s string of 10 rate rises in a row), rabid rent increases (4.8% year-on-year in February) and surging electricity prices (up 17.2%).
During such economic headwinds, businesses big and small inevitably search for opportunities to cut costs. CMOs need to ensure their marketing budgets are working harder than ever, especially when nearly half of Australia’s business leaders believe a recession is likely this year.
Late last year, PwC’s Pulse Survey showed that almost half (47%) of CMOs “strongly agree that their marketing budget will likely be cut before other departments”. Accordingly, PwC advised marketers to be “more deliberate with their investments and evaluate them more frequently” as budgets tighten.
A Statista survey reached the same conclusion: 75% of the global brands polled agreed or strongly agreed that the possibility of a recession this year influences their media budget decisions and advertising and market expenditures.
That means thinking creatively – after all, constraint breeds creativity – and outsmarting competitors when it comes to how you deploy your marketing budget. As competitors bunker down, there’s an opportunity for your brand to increase its share of voice and share of wallet.
According to the experts, Search Engine Optimisation (SEO) is a crucial part of the marketing mix, especially in tough economic conditions. Done well, clever SEO investment can reduce the impact of a recession on brands.
As Resolution Digital’s general manager of SEO David Castle explains, the right SEO strategy boosts the health of your brand long-term because it “allows you to reach a wider audience, helps you adapt to changing consumer behaviour, and works within the boundaries of budgetary constraints.”
Resolution Digital is a market-leading SEO agency with a track record stretching almost two decades. Castle, who’s been with Resolution for nine years, notes that given SEO is an always-on strategy, it pays dividends for years to come, even during recessionary times, and even when other marketing spend needs to be reduced.
That’s because search delivers impact, and continues to perform during downturns – people are still searching. Even if they’re not ready to buy in your category or from your brand right now, you’re still creating memory structures.
“During a downturn, consumers tend to be more cautious about their spending and are more likely to do research before making a purchase. By investing in SEO, companies can increase their visibility in search results and make it easier for potential customers to find them when they are doing research,” Resolution Digital’s experience manager Rahul Sengupta adds.
“This can have a longer-term impact as consumers are more likely to choose a brand they are familiar with and trust. This helps the C-suite build a stronger brand and increase their competitiveness in the long run.”
It is proven that this long-term brand building pays off. As leading researcher in marketing effectiveness Les Binet says: “You need to do brand building because brand building is the main driver of long-term brand preference, long-term sales growth, and long-term growth in revenue and profits. Brand building is the main thing that drives a company’s revenue stream – its cash flow, its profits.
“Brand building can also reduce price sensitivity, so it can increase margins. Brand building produces a long-term preference for your brands and products. It produces a much stronger long-term sales stream, much fatter margins, more revenue, more free-cash-flow in the long term and, therefore, more profit and shareholder value.”
So short term ‘fixes’ like pulling back on marketing spend or easing up on your SEO efforts won’t pay dividends in the long run. In fact, it only gives your competitors an opportunity to overtake your brand or increase their lead. And creating the familiarity and trust Castle refers to, with both new and existing customers, is what builds preference and profit.
“While it may seem counterintuitive to invest in marketing during a downturn,” Castle concludes, “companies that continue to invest in marketing tend to come out ahead of their competitors in the long run.”
SEO helps brands stay competitive, even in a recession, because it contributes to brand building efforts: if your brand is top of search, it’s top of mind.
To ensure your brand remains top of mind when it counts, learn more about how Resolution Digital can create best-in-class SEO for your brand.