Marketing Technology and Economic Recovery: Getting ahead of the curve
While it may seem wise to cut back on spending during a business cycle contraction, counterintuitive moves can prove to be the most profitable. During economically uncertain times, as a demand shock occurs and spending drops to a minimum, businesses tend to cut their budgets, especially their marketing expenditures.
Forbes refers to this reaction as “knee-jerk decisions” and argues that history has shown that to be misguided. In fact, recessions create unique marketing opportunities for companies to get ahead of their competitors and take advantage of the reduction in marketing expenditures and position themselves “for success when the economy recovers” (Forbes). A widely quoted Study by McGraw-Hill, analysed 600 companies in 16 different SIC industries between 1980 and 1985, during the 1981-1982 recession. The study found that B2B firms that maintained or increased their marketing expenditures experienced higher sales growth than their competitors that cut spending. As a matter of fact, firms that were aggressive advertisers during this time witnessed a 256% increase in their sales compared to firms that had cut down on advertising.
Despite economic uncertainty leading into 2023, trends are not showing any signs of slowing down. In fact, a study shows that budgets for social media are expected to increase by 43% this year, with a mere 4% of marketers intending to cut down. Recessions are not only a window of opportunity for marketing, the economic downturn is a promising time for software as well. If marketing was a smart and profitable business move in the 1980s, it is even more so now, with new technologies perfecting marketing strategies.
A crucial development in the marketing industry is the integration of artificial intelligence (AI) which provides the industry with a host of different benefits as online consumption trends are changing. Its ability to predict trends before they hit the mainstream allows firms to get ahead of the competition by identifying opportunities and positioning themselves as leaders on certain topics from the beginning. In short, AI allows for more efficient marketing in terms of costs and turnout by requiring less budget, less time, less human resources and improving actionable insight for potential marketing opportunities. This is achieved using a variety of different tools. One specific marketing trend that is proving to be more and more valuable is social listening.
Social media listening tools allow firms to identify not only hidden trends in the midst of billions of online activities but also recognise risks and opportunities. Making use of an economic downturn by investing in marketing can be profitable for firms, and with existing AI tools, firms can maximise the potential inherent in recessions for marketing. Companies provide social listening tools and explain that AI tools, such as social listening, are revolutionary in their ability to spot when your brand gets talked about across podcasts, news, social media platforms, blogs, forums, and so on.
To summarise, while recessions do present a challenge to the economy and society as a whole, some industries can mobilise and create momentum. Investing in marketing can help a firm position itself ahead of its competitors. Now, with recent developments in technology and the emergence of AI tools designed to optimise marketing, the potential created by recessions is even greater. Companies willing to invest in marketing and make use of new technologies can get ahead of the competition and take advantage of competing firms’ “knee-jerk decisions” to cut down on budgets. If investing in marketing helped firms in the 1981 recession, a time without worldwide internet connection, then the emergence of AI tools able to provide valuable insight and predictive analytics of trends and opportunities, transforms a recession into a window of opportunity for firms willing to take the step.