Marketing Challenges the 2023 Recession Will Bring [+ Solutions]
“To be or not to be…” We’ve used that Shakespearian expression for as long as history allows. And today, it’s still a relevant phrase as we’re all concerned about whether an impending recession is “to be or not to be.” While the U.S. has been teetering on whether we’re headed toward an official recession, 98% of CEOs do believe a recession is on the horizon this year. You’ve likely already felt, witnessed, or heard of the business and economic impacts of the potential 2023 recession.
But what does the impending recession mean for marketers? According to WARC’s Marketer’s Toolkit 2023, 95% of marketers expect the recession to impact them in some capacity. The question is, what can marketers do to navigate the challenges brought about by the economic downturn? What marketing initiatives will prove to be the most worthwhile during the recession? Don’t worry, we’ve got you covered. In this article, we’re focusing on the top four marketing challenges marketers will probably face in 2023 and how to overcome them.
Challenge 1: Inflation Will Cause Consumer Spend to Slow Down
Aligned with the likely 2023 recession, the U.S. inflation rate is currently 6.4%. This means the necessities of life (groceries, healthcare products, utilities, etc.) are now costing more than they have before—don’t even get us started on the price of eggs. Thus, the amount of money consumers have left over for discretionary spending is significantly less. As a result, inflation directly causes consumer spending to slow down.
For marketers, this can be challenging, as both B2C and B2B consumers are likely to become more price-sensitive and seek out cheaper alternatives. Understanding the impact of inflation on consumer behavior is crucial for marketers to develop effective marketing strategies that address changing consumer needs and preferences. To combat inflation and remain competitive in a challenging economic environment, marketers often need to:
- Adjust their pricing strategies
- Offer promotions and discounts
- Focus on providing value to their customers at each stage of the buyer’s journey
However, we cannot emphasize it enough—one of the biggest factors in not only surviving through the recession, but thriving in it, is by personalizing your marketing initiatives.
Solution: Segment Your Customer Lists to Hyper-Personalize Marketing Initiatives
When buyers are already avoiding unnecessary purchases due to economic turmoil, the last thing they want to be bombarded with is irrelevant marketing content that completely misses the mark on their current needs. Think about it. If you were strapped for cash, would you care about Apple releasing its latest iPhone? Or would you ignore that email announcement and instead click on the email containing Costco’s weekly deals? We thought so.
During the 2023 recession, buyers need personalized marketing outreach. Contact list segmentation is the key to hyper-personalization. List segmentation is a critical step to send targeted messages to various subsets of your audience based on significant buyer characteristics, such as:
- Buyer personas
- Job title
- Demographics, and more
Segmented lists help marketers keep track of their customer base and more effectively propel buyers through their purchase journey. Sending high-value content that inspires prospects to interact with the email leads to conversions. In fact, marketing emails that are segmented increase the likelihood that a recipient will click on a link within the email by 50%. Plus, 56% of people who unsubscribed from a business’ email marketing did so because the associated content was irrelevant to their use case.
Challenge 2: Martech Stacks Will Be Scrutinized
If a 2023 recession occurs, which it probably will, we can guarantee that marketing tech stacks will be heavily investigated. And it makes sense! Why spend money on martech that you either don’t use, or is simply not yielding a high return on investment? According to Gartner, marketers only use 42% of their martech stack’s capabilities. Here’s why:
As a marketer’s needs evolve over time, so does their need for various marketing tools and technologies. This means a SaaS platform that was once crucial to your marketing success a few years ago might now be a meaningless tool taking up too much of your marketing budget. Thus, it’s a good idea to audit your tech stack, especially during an economic downturn.
Solution: Audit Your Tech Stack to Make Sure Each Tool is Worthwhile
An audit of your martech stack can help identify any inefficiencies or redundancies across your tools. This enables you to optimize your tech and maximize your ROI. When conducting your audit, we recommend taking the following steps:
- Document all the marketing tools and software your team uses, including their purpose and how they are being used.
- Evaluate the effectiveness of each tool and its impact on your marketing goals. Identify any redundancies or gaps in the stack.
- Review the costs associated with each tool and consider whether the return on investment justifies the expense.
- Consider whether your team is fully utilizing the features and capabilities of each tool.
- Account for potential security risks and each tool's scalability.
- Based on the audit findings, develop a roadmap to optimize your marketing tech stack and align it with your marketing goals and budget.
- Eliminate any unnecessary tool and/or software subscription your team doesn’t use.
Challenge 3: Marketing Budgets Will Be Cut
It’s no surprise that marketing budgets are likely to be cut during the 2023 recession. In fact, it’s quite common to reduce marketing budgets during times of fiscal turbulence. However, this is a huge mistake. In reality, companies that prioritize their marketing efforts during a recession tend to outperform their counterparts who don't.
This was highlighted in a study conducted during the 1981-82 recession, where businesses that amped up their marketing during this time generated a 256% increase in sales compared to those who didn't. Despite the time elapsed since the study, the underlying economic principles remain relevant today. Investing in marketing during a recession not only maintains consistent revenue but also facilitates a smoother recovery once the economy improves.
Solution: Optimize Spend for Channels That Work
The worst thing you can do is cut back on marketing spend during a recession. But what if you’re not in charge of this decision and the budget gets cut anyway? If this is the case, it’s best to optimize your marketing budget to focus on channels that garner the best results.
Here is when making data-driven decisions is essential. It’s important to leverage performance data across marketing channels, including:
Based on the data collected, the next step is to identify which marketing channels garner the highest conversions and lead to the most sales. You’ll want to double down on these by:
- Allocating more time and spend on high performing channels
- Optimizing your strategy to generate the greatest ROI on your initiatives
- De-prioritizing the marketing channels that aren’t working
Challenge 4: Layoffs are Unfortunately Likely to Occur During the 2023 Recession
Throughout Q1 2023, we’ve witnessed major corporations like Google, Microsoft, Amazon, and Zoom lay off thousands of their employees. According to CNBC, Google laid off 12,000 employees, Microsoft let go of 10,000, and Amazon laid off more than 18,000. For Amazon, this was its “largest workforce reduction in the e-retailer’s 28-year history.”
Unfortunately, this is the reality for even the biggest companies in this business during a moment in time like the 2023 recession. This means startups especially are likely to feel the hit of the recession and be forced to make some organizational changes as well. To overcome this, outsourcing marketing efforts is vital to keeping the business afloat.
Solution: Outsource Your Marketing Efforts
Outsourcing marketing initiatives can be a smart strategy for business leaders looking to cut costs during a recession while maintaining their marketing efforts. By outsourcing, you can avoid the expense of hiring and training new employees, as well as the overhead costs associated with maintaining an in-house marketing team such as:
- Employee benefits
- Paid time off, etc.
Additionally, outsourcing can provide access to specialized skills and expertise that may not be available with an in-house marketing team. A skilled marketing partner can help you develop and implement:
- Effective marketing strategies
- Improve brand visibility
- Generate high-quality leads and conversions
All of which can be particularly valuable during the 2023 recession. Overall, outsourcing marketing efforts is a cost-effective way for businesses to weather economic downturns and remain competitive in their market.