November 2, 2022

Investing in Performance Marketing During a Recession

Michael Cheng

Investing in Performance Marketing During a Recession

Retailers have more to gain than to lose

There’s no doubt we’re facing a recession and a global economic slowdown. Retailers have been instructed to cut costs and reduce overhead to shield them from the challenges ahead. For marketing departments that means a reduction in critical spending on acquisition and retention. Although this is the most logical path for most retailers, there are also reasons to not scale down your marketing efforts, specifically in performance marketing. Here are reasons to start investing in performance marketing, continuing to fund your existing campaigns, or even increasing spend.


It’s an Efficient Marketing Channel

Retailers invest in performance marketing because it simply works. A performance marketing partner aims to maximize ROI for retailers within a set budget, analyzing data and bids to reach COS or ROAS targets. The better your performance marketing provider can optimize, the better ROI you will experience. Having these targets in place actually reduces risk for retailers as there is an expectation to achieve a certain goal. This reduced risk is an advantage over most marketing methods.

Another vote of confidence is that although we’re anticipating tough economic times ahead, 59% of marketers are still planning to increase spending in ecommerce ads in 2023. Marketers are clearly convinced that performance marketing can provide sound returns even in turbulent times.


It Reduces Costs and Overhead in a Different Way

Cost cutting is the broken record we keep hearing in this economy, but a necessary evil we all must partake in. The challenge for marketers executing their own performance marketing campaigns is collecting enough actionable data and applying findings in a timely and effective manner. Today’s predictions can be a lifetime by next week. Unless you have dedicated data analytics staff and a team of experienced performance marketers, managing and executing this is extremely time consuming. And of course this comes in a time where marketing teams are expected to do more with less.

Outside of data analysis, most marketers overlook the fact they will not have access to exclusive or specialized pricing that performance marketing providers receive from their partners within their network. Creating a program or trying to manage rates and these relationships on your own can be costly in the long-run.

Having a performance marketing partner can reduce the cost and overhead associated with data collection, analysis, and management of running performance campaigns. This enables teams to redirect resources to areas that can sustain or drive additional growth.


It Maintains and Adds to Your Brand

Brand awareness is probably the last thing marketers are thinking about in these challenging times, but it’s worthwhile to keep your brand top-of-mind before consumers hand over their money to your competitors. Even if consumers are spending less, it does not mean they have completely stopped spending. Keeping your products in the spotlight, and showing how they’re better than your competitors through price, quality or something else will keep you on the radar when they’re ready to purchase–either now or in the future when things turn back around. Enforcing your brand will create loyalty you need for long-term growth and profits.

Many big-name retailers continued or increased marketing spend during an economic downturn to capture more market share. During the last recession, TJ Maxx increased their marketing investment by 15% to capture a larger range of customers. The following year they reported that 75% of shoppers were first-time customers. Investing more when others are doing the opposite can work in your favor.


What Happens Next?

While it may not be time to put “the pedal to the metal” marketers need to keep their foot on the gas. In this economic climate it helps to have a marketing arm that is high-performing but low-risk, can reduce costs and overhead, and be your trusted partner on this challenging journey. Keeping your branding alive and well is important for the long-term growth of your brand, and can help you stay afloat as we await smoother sailing ahead.

Will 2023 boom or bust? We all won’t know until it happens – especially in the world of ecommerce and consumer behavior. Our prediction: Holiday sales reach modest numbers and we continue to hit price pressures from supply chain issues throughout early 2023. We continue stomping out the pandemic, which provides some relief, but global unrest slows overall growth. However, when the clouds start to clear and ecommerce starts its climb to dominance again, marketers that invested in long-term growth opportunities will be well-situated for success.


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