Why You Should Increase Marketing Spend in a Recession

Periods marked by high-interest rates and a slowdown in economic growth are synonymous with businesses cutting marketing dollars and laying people off. Whether you’re a small or large business, high interest rates can cause challenging times, whether the impacts come from the balance sheet or struggling customers buying from you less often.  

When sales slow, while general macroeconomic factors may be to blame, finding new ways to interact with prospective customers is better than simply cutting marketing spend as many managers do. Often, marketing items are the first to go due to their ease of being cut (certainly easier than payroll). Businesses that are proactive in recessions and maintain or increase marketing spend in a recession do better than those that are not (Srinivasan et al., 2005).  

If you think about it, cutting marketing spending may seem smart for margins, yet it's counterintuitive. Marketing spend helps convert sales under normal circumstances, so cutting that means that while sales might decrease due to a poor economy, cutting marketing spending will lower them even further. This will give you the feeling your business is faring even worse than the overall economy.  

Let’s look at a few reasons why you should keep your marketing spending the same during economic uncertainty.  

Adapting to Changing Consumer Behaviours  

While businesses that maintained their marketing expenditure fared better, they inevitably made adjustments. As the business landscape evolved, so did their strategies for customer targeting and allocation of marketing resources. This underscores the importance of adapting to shifting consumer behaviours. When faced with declining sales volume, the immediate inclination may be to increase prices to preserve overall revenue. However, this approach needs more foresight. During a recession, businesses and consumers experience financial constraints and seek opportunities to reduce expenditures. Therefore, revising the narrative around your product or service—emphasizing its relevance even in challenging circumstances—is a more effective marketing strategy.

Decreased Visibility & Capturing the Opportunity  

During economic downturns, many businesses retreat from the market, reducing their marketing and advertising spending. Yet, this retreat presents a great opportunity for SMBs aggressive enough to maintain or even scale their market presence by filling the gap left by retreating competitors. While this may seem like a risky approach, it's in such moments that seizing market share becomes easier. Being present in a market where competitors are absent allows you to be opportunistic and establish a more substantial presence.

It's important to remember that economic cycles fluctuate—what goes up comes down, and vice versa. By doubling down on your marketing spending and diversifying into new strategies, you maintain your brand's visibility and increase its presence. In an environment where competing messages have diminished or disappeared altogether, intensifying your marketing efforts ensures that potential customers are captivated by your brand amidst the prevailing scarcity of options.  

Building Trust  

While your competitors recede from the market, you establish trust with customers and clients by maintaining your visibility, as mentioned above. What may seem like an expensive cost or hit to margins in the short term will translate into a long-term benefit in a more loyal customer. Why? Because customers value trust and safety, and brands that stay visible throughout economic cycles are more trustworthy to customers. People seek comfort in brands and services they recognize, and being recognized couldn’t be easier in an environment where competitors have retreated.  


While economic downturns may pose challenges, they also present opportunities for businesses to differentiate themselves, capture market share, and solidify their position for long-term success. By recognizing the value of maintaining marketing spending and leveraging it to adapt, businesses can navigate uncertain times with resilience and emerge stronger on the other side.


Ready for a year-end that feels effortless?

Let us handle your business' financials
in the simplest way.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.