How Does Recession Affect Advertising?

How Does Recession Affect Advertising?

Running a company means reading the economy. Many of our clients have expressed valid concerns about a potential recession and how it might affect the way they do business. Whenever the economy takes a downturn, there’s an inevitable impulse to save money by cutting costs, with advertising being clipped first. As digital marketing experts, Logical Position is here to say a recession is actually the best time to invest in advertising. So, how does recession affect advertising, and what tools, knowledge, and resources can LP and your account manager provide to help protect your investment?

An Eventful Two Years

During the course of the pandemic many reduced their ad budgets as in-person buying dried up. An understandable reaction for smaller companies spending a few hundred dollars or less on ads per month, but for entities with larger budgets, spending less was (and is) a mistake. When a company stops running ads, it loses out on impressions, clicks, and sales. That’s a given. But occasionally, we fail to calculate opportunity costs as well. What could we be missing in terms of assisted conversions and brand exposure later on? The best comparison is a 401k plan. Deciding not to invest in it for a year or so may save a few bucks now, but it’s guaranteed to lose money down the line, in interest if nothing else.

Cost Per Click Calculations

Cost per click (CPC) refers to the price paid by an advertiser when an online ad is clicked. During the pandemic’s height, as in-person purchasing diminished, more companies invested in Google Ads and conducted business online. A good policy, even if it seems expensive on the face of it. Currently, and across a variety of businesses and industries, CPCs are higher than they’ve ever been, Google Ads became very competitive over the past 18 months, and businesses had less gas to put in their tanks to keep sales going. To illustrate, if the average CPC is a dollar and a company invests $1,000, they’ll get 1,000 clicks. If average CPC rises to $1.50, however, and they remain at the same budget, the clicks won’t go as far. Keep in mind, PPC is intent-based, which is a great reason to rely on it when times are lean. As others cut their budgets and leave Google Ads, CPCs eventually come down. That’s when our clients can strike and pick up market share, which takes far more time and money to achieve in ordinary years. In time, LP clients who continued to run ads saw record numbers.

Trimming the Fat, Keeping Things Lean

Don’t think of an advertising budget as having an on/off switch. The point is not to end ads but to make them better. LP is pretty good at this. We review search term reports to see what brings people to a site and what doesn’t. Adding negative keywords—terms related but not directly relevant to a product—keeps ads from appearing to people unlikely to purchase. Likewise, ads can be adjusted according to scheduling, location, devices, and audiences.

Refining your data feed improves efficiency. For example, LP can help keyword stuff your data feed and insert important details into product titles. These changes catch Google’s eye and influence product performance (Google provides further tips to optimize your data in this article).

For search ads, update ad copy and hone in on a strong brand message. Ad copy that’s focused and to the point can pre-qualify users and limit waste in a Google Ads account. Ensuring brand messaging is on point and telling users what the business offers or can do for them improves ad efficiency.

The new year is a great time to perform a keyword audit. Product offerings often change over the course of a year, underlining keyword effectiveness. Look at web results to see which terms bring users to the site, and which can be ditched. Staying proactive to ensure the right people see the right ads can help stretch a budget. And speaking of stretching…

The Elastic Sales Cycle

Conversions always take a hit from inflation. The sales cycle has grown more elastic, and people are taking longer to make purchases because they want the biggest bang for their buck. A customer may visit dozens of sites in search of the best deal before returning to a site and making the final purchase. Not every LP client can increase their budget, so we establish appropriate tracking to follow customers along their sales cycle and evaluate advertising effectiveness. If we’re bringing in sales from individuals who took weeks to make their purchase: mission accomplished, especially during the tougher months. We recommend display campaigns such as static remarketing, dynamic remarketing, and assorted YouTube options as well. Such campaigns are cost-effective, letting us add touch points along the customer’s journey and help them keep us in mind!

At LP, we also believe in tracking potential customers to inform the changes we make to optimize ads and drive performance. We also consider the power of micro-conversions, setting goals for time spent on a site, pages viewed per session, and add-to-cart actions. These may not pay the bills like macro-conversions do, but they provide guidance and ensure we’re effectively using a client’s budget.

Email Excellence

Online ads are great, but targeted email marketing remains a trusted and effective way to engage customers. During the pandemic and during a recession, email is a workhorse that saves money and neatly complements other marketing efforts. It leverages an existing customer base, engaging an audience that already initiated contact or previously purchased products. Email is affordable as well. Google Ads are intent-driven, with the advertiser paying for every click. Conversely, the economics of scale for email are incredible since it’s sent at a fixed cost. Finally, before and after purchase, email establishes and fortifies trust in a company. When a customer makes a purchase, it’s worth spending a little extra on email marketing to increase their lifetime value. Email drives more direct revenue while increasing the value of your spending on Google, Microsoft, and Meta Ads, and other platforms. Email isn’t just another campaign add-on; it’s a critical factor in your marketing mix.

The Perfect Fit

How does recession affect advertising and what can Logical Position do to help its clientele stay on top? It’s not a one-size-fits-all proposition! Whether through PPC advertising, email marketing services, or other means, we’re intent on choosing the right products and strategies and finding the best fit for a company and its campaigns in response to a recession, market fluctuations, performance issues, and more. If you want to form a more effective ad plan that can ride out the recession storm, talk to your LP account manager about the above strategies and others!

C.J. Keepes

C.J. Keepes, Account Manager Team Lead

C.J. Keepes is an Account Manager Team Lead at Logical Position, an Inc. 500 digital agency supporting 5000+ clients across North America. LP is proud to be the reigning recipient of Google’s Lead Generation Premier Partner of the Year award! The award-winning agency offers full-service PPC management, SEO, Paid Social, Amazon and Creative Services for businesses large and small. As a Google Premier Partner, Microsoft Elite Partner & Meta Business Partner LP is in the top 1% of ad spend managed across platforms.


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