3 Marketing Channels You Shouldn’t Scale Back in a Recession

March 20th, 2023 Gareth Hoyle Leave a comment

When a potential recession is looming, it’s only sensible to explore which spending commitments your business could scale back on. But with past lessons learned and many brands pledging to continue their marketing spend throughout 2023’s predicted recession, business owners should consider the downturn an opportunity to hone in on those core digital marketing channels that need to remain strong and resilient.

But which digital marketing channels are best at delivering a strong return on investment in times of uncertainty?

Gareth Hoyle, Managing Director of search marketing agency Marketing Signals, looks back at how businesses approached marketing activity during previous recessions, and which channels he believes should be the focus of increased activity during a recession:

Cutting back on SEO could give your competitors a boost

In times of recession, consumer spending habits often change, which is why effective Search Engine Optimization campaigns are essential for brands to get a better understanding of these variations to continue to attract new and existing customers. SEO relies on quantifiable keywords and search volumes to break down what your target audience is actively searching for online.

During the COVID-19 pandemic, Google searches for food, electrical goods, clothing, e-learning and even insurance shot up year on year. So even during a worldwide health catastrophe, people were still flocking to Google for answers, questions and products.

SEO provides businesses with the opportunity to rank higher on the Search Engine Results Page (SERP). When done correctly this will increase the amount of relevant traffic a site can earn, and as a consequence, will also drive increased revenue – all at an unrivalled ROI compared to other digital marketing channels.

So, for an ambitious business looking to grow their online revenue, scaling back on SEO means curtailing the impact of the marketing channel with the highest ROI. The combination of an ever growing level of consumer demand (search volume) coupled with relevance, measurability and scalability make SEO one of the most effective digital marketing channels, regardless of how the wider economy is performing.

If you are still unsure then you should ask yourself this: If you decide to cut your investment in SEO activity, what will the future look like for your brand online? The answer is those competitors that continue to invest in SEO will be moving ahead of you while your business either stands still (or worse moves backwards). Furthermore, how will you feel about having less organic visibility and a shrinking share of voice for the most competitive keywords? Remember this also: in terms of online marketing, standing still is in some cases going backwards very quickly – sometimes you may be investing just to maintain your current position in competitive markets. Thus, imagine what would happen if you stopped investing in SEO entirely (or even just reduce your spend).

Increase your brand awareness and site authority through Digital PR

A solid link-building strategy is a prerequisite for good rankings, as search engines use links as the primary means of determining how authoritative a site is within any given industry. In other words, the better links you have, the more credibility you’ll have with Google, and the more organic traffic and sales you can potentially drive.

Of course there are many different types of link building strategies you can pursue, however, the one that is likely to drive the most authoritative links is Digital PR. Links from Digital PR activity, if executed well, will include top tier coverage from a mixture of national or local press, plus trade and industry publications. These links will last the test of time and will help drive traffic to your site, as well as boosting your overall domain authority.

One thing to note with Digital PR: it often drives the best links to a site, and as a consequence it often costs the most to execute. However if you follow this argument logically, by reducing or stopping your Digital PR activity, you stand to lose (or reduce the impact of) the most important link building channel. Moreover, during a recession could be the ideal time to exploit the fact that there is potentially less activity from your competitors. Remember journalists whether local, national or trade still need content to fill their column inches with, regardless of the state of the economy.

Utilize PPC campaigns to keep your brand competitive on search engines

In dark financial and economic periods, the level of comfort and trust that people have in Google shines through. And with 54.4% of all clicks coming from the top 3 search results on Google, having the right PPC ads is essential in order to maximise the commercial opportunities open to digital marketers

Let’s face it, whether people are spending or not during a recession, they’re constantly consuming information online, and by proxy, your ad campaigns. Who can resist such a simple but effective way of keeping your brand name at the forefront of search engines when other companies are looking to shrink theirs?

By continuing to advertise via Pay-Per-Click during a downturn you can push your business forward and potentially get ahead of your competitors who may have reduced their click budgets. How many chances do you have to capitalise on an opportunity like this and continue growing your brand’s momentum?

In times when consumers are eager for simple and straightforward answers to their searches, your tight but informative content can improve your Quality Score on Google, providing you with ads that may appear more often.

For internal business practices and overall account structure, being able to split your target keywords into smaller groups will also give you more understanding of which terms work best and where you may need to reassess your game plan.

Short-term thinking vs long-term business goals

No one can blame a business for looking for short-term cash saving measures like cutting their marketing spend. That said, the problem lies in how to regain that momentum you had pre-downturn once you’ve made cuts, and how you’re going to catch up with the brands that pushed on in order to achieve those long-term goals.

Like anything in life, it’s the future rewards of sticking to a clear path that provide you with the fruits of your investment. With modern consumers willing to change their allegiance to brands that exude strength and consistency in uncertain times, scaling back your marketing spend could mean you fade into the background compared to other businesses who may continue to invest in marketing activities.

While nobody is asking you to start marketing more aggressively, this potential downturn should be considered a time of reflection that allows you to keep the best channels at your disposal running smoothly.

If your business can remain in sight of the consumer, the strength and authority of your band will shine through. In turn, you’ll be on the path to greater success on the other side of this recession, while your competition misses the boat entirely.

Archives, Education, Global Trade Daily

How Can Businesses Survive a Global Recession?

February 27th, 2023 Shane Neagle Leave a comment

Imagine you’ve spent years building your dream business, pouring your heart, soul, and savings into it. Then, what could seem out of nowhere, a recession hits. Suddenly, the world economy is struggling, and your business is feeling the effects.

Your customers are cutting back on spending, your revenue is dwindling, and your future looks uncertain. It’s a nightmare scenario that no business owner wants to accept, but it’s a reality that many could soon face. That’s why it’s essential to have the right mindset and strategies in place to not just survive but even thrive in anticipation of this upcoming recession.

Looking to the future, the specter of a global recession casts a long shadow. Economic instability, geopolitical pressures, and a host of other factors are causing anxiety for businesses and consumers alike. A recession can be a difficult time for any company, with reduced demand, falling revenues, and the need to cut costs. Nevertheless, there are measures businesses can take to proactively prepare for and mitigate the impact of a recession.

We’ll explore some practical strategies that businesses can use to survive a global recession. By taking action now, businesses can minimize the impact of the downturn and emerge from it in a strong position.

From conducting an internal review of operations to diversifying revenue streams and utilizing high-yield savings accounts and trading options contracts, we’ll provide insights and advice that can help businesses weather the storm and come out on the other side stronger and more resilient.

Conducting An Internal Review

During a global recession, businesses must be prepared to make difficult decisions about how to allocate their resources. One of the first steps that businesses can take is to conduct an internal review of their operations to determine what is working and what is not. This review can help businesses identify areas where they can cut costs and conserve capital, while also identifying opportunities for growth and innovation.

To conduct an internal review, businesses should gather data and insights about their operations, including financial statements, customer feedback, and employee feedback. This information can then be analyzed to identify areas where the business is performing well, as well as areas where it is struggling. Businesses should also consider external factors such as market trends, competitor activity, and changes in consumer behavior.

Nurture Existing Customer Base to Decrease Churn Rate

Once the internal review is complete, businesses can begin to identify areas where they can cut costs and conserve capital. This may involve eliminating non-essential expenses, such as unnecessary travel or entertainment, or reducing spending on marketing and advertising. It may also involve renegotiating contracts with vendors or suppliers to secure better pricing or terms.

During a global recession, one of the biggest risks that businesses face is losing customers. As consumer spending decreases, customers may be less likely to make purchases or may look for cheaper alternatives. However, businesses can take steps to mitigate this risk by nurturing their existing customer base and reducing churn rate.

To nurture their existing customer base, businesses should focus on building strong relationships with their customers. This can be done by providing excellent customer service, offering personalized recommendations or promotions, and keeping customers informed about new products or services. Businesses should also make an effort to listen to their customers and respond to their feedback, whether it’s positive or negative.

In addition to building relationships with customers, businesses should also work to increase the value that they provide to their customers. This may involve offering loyalty programs, bundling products or services, or providing special offers to existing customers. By doing so, businesses can make it more attractive for customers to continue doing business with them, even during a recession.

Businesses should also look for opportunities to streamline their operations and improve efficiency. This can include automating certain tasks or processes, outsourcing non-core activities, or consolidating operations to reduce overhead. By streamlining operations and focusing on core activities, businesses can emerge from the recession in a stronger position and better equipped to take advantage of growth opportunities when the economy recovers.

Diversify Revenue Streams

Diversifying revenue streams is a key strategy for businesses looking to weather a global recession. By reducing dependence on any one product, service, or market, businesses can increase their resilience to economic downturns. This can involve exploring new product lines or service offerings to tap into new sources of revenue. Whether expanding into new markets or simply introducing new offerings to existing customers, diversification can help businesses adapt to changing economic conditions and emerge from a recession stronger than before.

Diversifying revenue streams and generating additional income is essential for businesses to thrive during a global recession. One effective approach to achieve this is by investing in high-yield savings accounts. By allocating a portion of their cash reserves to these accounts, businesses can earn interest without taking on excessive risk. Currently, the interest rates on high-yield savings accounts range from 0.25% to 5%, providing a relatively safe way for businesses to earn additional income. This can be particularly beneficial during a recession when revenue may be low, and the extra income can help businesses stay afloat. However, it is crucial to carefully research and compare different high-yield savings accounts to find the best fit for their needs, considering factors such as interest rates, fees, and accessibility. By doing so, businesses can maximize their returns and strengthen their financial resilience during challenging times.

A smart tactic that a business could approach is through trading option contracts. In a recession, markets can be unpredictable and volatile, making it difficult to generate profits through traditional investment strategies. However, option contracts can provide investors with the ability to profit from negative price movements, through put contracts and short selling. For businesses with sufficient cash reserves, trading in option contracts can be a way to mitigate the effects of the recession on their revenue streams.

It’s crucial to approach option contracts with seriousness and care, as they can provide a powerful means of boosting revenue for businesses. However, because of the high level of risk involved it’s essential to fully understand the intricacies of option trading before executing any trades. Just as you’ve invested time and effort into ensuring the smooth operation of your business, it’s essential to expand your knowledge and execute trades with precision and efficiency. With the right approach, options trading can be a valuable tool in your business strategy.

Conclusion

In times of global recession, it’s understandable to feel anxious about the future of your business. But remember, there are ways to prepare and even thrive in the face of economic challenges.

By taking a strategic approach, such as conducting an internal review, nurturing your existing customer base, diversifying your revenue streams, and staying agile, you can set your business up for success. Seek out new opportunities and control costs, but most importantly, don’t forget to be flexible and open to change.

Every business is unique, and what works for one may not work for another, so don’t be afraid to try different approaches. By combining these strategies with a willingness to adapt, you can emerge from a recession stronger and more resilient than ever before. Remember, your business is capable of weathering the storm and coming out on the other side, and with the right mindset and preparation, you’ll be ready to face any challenge that comes your way.

Archives, Global Trade Daily

The World Bank is Forecasting a Recession – Good News for Some

January 27th, 2023 Kirk Samson Leave a comment

A global recession seems inevitable in 2023 based on a deluge of recent economic forecasts, most notably that of the World Bank, which downgraded their outlook for 2023 last week. Russia’s ruinous war against Ukraine, international inflation and continuing global trade conflicts over technology will also slow economic growth across many sectors. Some pundits are even wondering whether developments such as ChatGPT might negatively impact the labor market. Nevertheless, in every economic situation there are winners as well as losers, so who will potentially benefit from the global economic downtown?

Firms and technology that provide efficiencies

Businesses looking for efficiencies will be turning to global service centers as an ‘easy button’ on budget and manpower reduction. With global services centers offering experts in finance, IT and legal at a fraction of the cost of North America or Europe-based staff, they represent an extremely impactful solution to many companies challenged by shrinking margins and unexpected inflation. In many cases leveraging global service centers in places such as India can provide a 60% or higher savings on existing staffing costs. Improvements in technology also offer another important layer of savings and efficiencies. Technology companies that offer these services will benefit from the recession as customers are driven into their arms out of need. While ‘old’ tech companies such as Google and Microsoft are dramatically cutting staff in the face of the economic turndown, AI-focused tech companies are in growth mode as companies seek tools to improve how efficiently and quickly they do business.

FDI flows will change to the benefit of global allies

Last summer the term ‘friend-sourcing’ enter our FDI lexicons thanks to U.S. Treasury Secretary Yellen’s comments about the importance of nearshoring/offshoring in the ‘right’ geopolitical locations to keep supply chains safe. With the U.S. and most European nations sanctioning Russia and continuing their decoupling from China, other countries are sure to see a tangible FDI benefit. India, Vietnam, Indonesia, Malaysia, and lower cost NATO/EU nations such as Poland, Croatia and the Baltic nations should see an increase in investment from companies in G7 countries that are looking to save money, avoid export control scrutiny and diversify their supply chains away from locations that risk getting sanctioned due to their association with Russian activities or China.

Walmart and Costco have the welcome mat out

Low-cost retailers should also thrive in a recessionary economy. Companies such as Walmart, Costco, Aldi and their global equivalents were created to support customers who are looking to stretch their dollars/euros/yens to cover necessities and they will benefit from the increased foot traffic that the recession is certain to bring. While they may see a dip in their sales of higher-end products, staples and food products will see an uptick. There will be increasing pressure on suppliers to these retailers to lower their margins and pricing, which brings us back again to the ‘friend-shoring’ issue. With the dollar continuing to ride high, it’s cheaper to import many products so companies that can spread their manufacturing and production facilities outside of the U.S. will be more competitive.

How to win in a recession

Companies that can pivot to find efficiencies through technology and by taking advantage of the services and products available in the global market will thrive despite the global turndown, but only if their get it right the first time. If the blockage of the Suez Canal in 2021 taught us anything, it is that supply chains are at the mercy of numerous factors that can crush a company that is relying on thin margins in a tight economy. Political risk and supply chain research needs to be thorough and companies need to budget extra to ensure a diversity of sources. The concept of ‘Just In Time’ (JIT) sourcing needs to be balanced by the reality of ‘Just In Case’ (JIC) variation in sourcing. Businesses that are comfortable taking advantage of the global smorgasbord of shared service centers, new efficiency technology and growth and investment into safe ‘friend-shoring‘ opportunities will do well despite the recession.

Kirk Samson is a Director at the International Trade Association of Greater Chicago, an executive at the global consulting company Nexdigm, and a former U.S. diplomat and international law advisor.

Archives, Global Trade Daily, Stories

A 4-Step Business Plan That Will Have You Looking Forward to the Next Recession

November 1st, 2019 Jonathan Slain and Paul Belair Leave a comment

The following is adapted from Rock the Recession: How Successful Leaders Prepare for, Thrive During, and Create Wealth After Downturns.

The highest-performing companies don’t fear recessions—they look forward to them.

The idea sounds counterintuitive, we know. What possible reason would a business leader have to want an economic downturn?

The answer is simple. A recession, properly planned for, can present opportunities for growth that would otherwise take a decade or more to pan out, like mass purchasing expensive assets for cheap, acquiring other companies, and convincing top-shelf talent to join your team.

By following the four steps outlined below, you can plan ahead and set your company up to not only survive the next recession, but use it to fuel your growth.

Create Uncontested Market Space

Rather than struggling to beat the competition and exploit existing demand during a recession, the more strategic route is to create uncontested market space (read the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne for more on this topic). Doing so, of course, is easier said than done and requires creativity and drive, but if you can successfully pivot to a new market, the payoff of a less-crowded space will be worth it.

Research shows that “companies that successfully adapt can emerge stronger than ever,” while those that do not “face a Darwinist reality” (Journal of Business Research). Why fight the competition when you can make them irrelevant?

The best way to create uncontested market space is to adopt new technology and use it to differentiate your service from your competitors’ before they get the chance to do the same. Find a way to solve a problem for your customers that no one else has solved. Embrace technology as a way to both create a better user experience on your clients’ end and to save labor on yours.

You’ll be able to integrate new tech into your company with fewer hiccups if you follow the next step and look ahead to your end goal.

Begin With the End in Mind

Look at your business goals from a strategic perspective by beginning with the end in mind. In other words, look ahead to what would happen in an exit situation.

Consider, for example, how an acquirer might pay seven to eight times earnings for an annuity service business, but they would only pay book value, or at most two to three times earnings, for a one-off project business. Use these predictions to plan how you want to diversify or grow your business to maximize its value.

Growing your company in a good economy will make you more likely to survive a recession because, in general, bigger companies tend to fare better. By looking ahead, you’ll know where to invest your money and efforts to reach the goals you have in mind.

This step naturally ties into the next, which involves bridging the gap between your beginning and end states.

Bridge the Gap

Once you have an end goal in mind, you need a plan to bridge the gap between where you are now and where you want to go.

For example, if you aim to go from $25 million to $100 million in revenue, and want to enter different markets, but don’t have the in-house talent to do it, then what you have is a “talent gap.” One way to close that gap could be through acquisitions.

Similarly, if you want to adopt continuous improvement practices within your company but don’t have anyone on your team who is an expert—that would also be a talent gap. Hire a “lean” expert.

Identify your gaps and come up with a timely, actionable plan to fill them.

Create Your “To-Buy” List

You have your market, your goal, and your plan. Now you just need to seize the opportunity created by a recession and acquire assets while the price is low.

As a general rule, everything is cheaper in a recession. Talent is cheaper. So is the competitor you want to acquire. And when banks are looking to dump assets that they’ve already written off—assets they just want to get off their books—that’s when you can score some of the best deals.

By planning out what you want to acquire—and maintaining enough liquidity to buy it—you can strike as soon as the recession hits, giving you first pick of assets while your competitors scramble to find the capital.

Hopefully, being armed with this four-step plan will turn your recession fears into anticipation. Start creating market space, setting goals, laying out actions to make them happen, and writing your to-buy list, and you’ll be well positioned to experience enormous growth when the recession finally hits.

For more advice on recession planning, you can find Rock the Recession on Amazon.

____________________________________________________________-

Jonathan Slain and Paul Belair founded Recession.com to give entrepreneurs a free tool to assess their recession readiness at Recession.com/Ready.

Jonathan Slain spent the Great Recession huddled in the fetal position on the floor of his office. He borrowed $250,000 from his mother-in-law to survive. Jonathan paid his mother-in-law back and is now a highly sought-after consultant (and, yes, he’s still married!). Jonathan leverages his experience in investment banking and as an entrepreneur on the keynote speaking circuit because he doesn’t want anyone else to have to borrow money from their mother-in-law in the next recession.

Paul Belair wasn’t scared when the Great Recession hit. He invested $1 million to purchase a business and just five years later sold it for over $70 million dollars. He achieved an American dream exit by using the Recession Gearbox model outlined in this book to create an intentional recession preparation plan. Paul is a CPA and an MBA, and currently serves as chair of the Young Presidents’ Organization Construction Industry Network.