The bad news is everywhere. Consumer sentiment has fallen below the 50-point mark. This measure of consumer feelings about the local economy, employment and their investments has been sliding for a while. Consumers still feel confident about their jobs, but they can see their purchasing power eroding, especially in light of skyrocketing inflation. The latest news reports probably have your clients cutting their ad budgets. If you are targeting the right verticals, those that do well during slowdowns, you can boost revenue. You can also share information with clients about how increased advertising can grow sales, even during a recession.
Target The Right Verticals as the Economy Cools
Businesses That May Struggle
Nearly half of small businesses, the job creation machine of the U.S. economy, say they could close their doors by this fall. That’s a significant increase over the numbers reported by Alignable’s 2021 survey and could translate into a significant loss of revenue for you. Business most likely to fail include retailers, restaurants and car dealerships, say Alignable analysts. In addition, the pressures on the real estate agent industry should surprise nobody. With fewer homes trading hands, these professionals have less business to close.
Businesses That May Thrive
It’s time to consider soliciting business from recession-proof industries and target the right verticals, prospects that tend to advertise more during times of economic contraction, to keep your ad sales pipeline going. Some of these industries are non-cyclical, and depending on what’s happening socially and culturally, they may be buying advertising during the current slowdown. Unfortunately, people will continue to get sick. Urgent care and medical clinics will do well, but people may put off elective surgery. With COVID-19 still mutating, it’s likely like a new round of vaccines will become available this fall and be promoted by drug stores, medical clinics.
Higher income consumers will be looking for better ways to invest their money after the stock market’s poor performance since the start of the year. They’ll rely on the wisdom of financial advisors to guide them.
Repair services tend to have higher demand during recessions. Consumers want to hold off on making big-ticket purchases and will call a repair shop to fix their appliance or their broken riding lawn tractor. Building supply stores and hardware stores also fare well in a recession because consumers are more willing to tackle home repair projects themselves.
Your clients should know that continued inflation is driving consumers to leave brand loyalty behind. 30% of consumers have shifted to private label brands. This change can be a big boost for your grocery clients, making them among the right verticals to target. While food and beverage is considered a non-cyclical industry, recessions can make an impact as consumers purchase less expensive brands of packaged foods and turn to cuts of meat that aren’t as pricey.
Prepare to Compete Against the Tech Giants
Don’t panic and resign yourself to losing more ad sales to Facebook and Google. It’s true that these industry giants are also reporting “a pullback in spending by some advertisers.” They are feeling the sting like all media sellers. But there may also be a change in attitude among your clients. Some media experts have said there are more “ad buyers willing to move money away from Facebook and Google on moral grounds.”
Failing to Advertise Results in Market Share Loss
Remind your clients that “[c]ompanies that have bounced back most strongly from previous recessions usually did not cut their marketing spend, and in many cases actually increased it," say Koen Pauwels and Nirmalya Kumar.
Encourage them to get creative with their advertising. For consumers they’re already doing business with, they should communicate more using the channels that have worked in the past. To get the best value out of their investment, formats like retargeting may generate higher sales.
Review the concept of share of voice (SOV) as described by Peter Field. Not everyone can afford to advertise during a recession. And those that do, should know that their best customers may not be able to buy their product or service at the time an ad campaign appears. But their presence in the marketplace counts and “taking the short-term hit to profitability, by investing in advertising during the depths of recession, is ultimately worth the long-term profit.“
We are about to enter the busy holiday shopping season. While consumers may be spending less, they will be purchasing gifts. Be sure you target the right verticals with your best packages to generate revenue through the end of the year. And to show your clients what competitors in their vertical are doing, run a Digital Audit on AdMall by SalesFuel.
Photo by Lukas on Pexels.
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