With the cost of living squeezing everyone from all possible angles and a looming recession, many businesses will try and see where they can quickly cut costs – and marketing is usually one of the first things to go.  

But history has proven that while cutting marketing budgets during recession can offer short-term relief, it can adversely impact a business, its brand and its value in the longer term.  

In the face of the government rolling out a campaign next month urging brands to slash prices by cutting marketing spend, we thought this might be an opportune time to explain exactly why this is such a bad idea. 

Is cutting the marketing budget during economic downturn bad for business?  

Businesses are often tempted to slash their marketing budgets during rough patches as they believe it will help them stay afloat. 

However, this is a misconception as research has consistently proven that halting ongoing marketing activities may be unwise and a misguided effort.  

Studies have shown that organisations that continue to be engaged in marketing activity during a rough patch are more likely to survive a recession.  

Clearly, if everyone else is slashing their marketing budgets, there is less competition for share if voice. This presents an opportunity for other businesses to jump in and command the market share without any hassle.  

Research by McGraw-Hill revealed that in the 1980s recession, those businesses who were aggressive about building their brand through advertising, grew 275% more than those who didn’t. 

Similarly, one of the world’s best-known brands, Kellogg’s, only has the market share it has today, because of how they reacted during the 1930s recession. Before the Depression era, Kellogg’s were locked into rivalry with Post, an American cereals manufacturer. Both the companies were looking for ways to emerge as the market leader. 

When the economy took a nosedive, Post decided to put a stop to all their marketing activities. On the other hand, Kellogg’s made the smart move of tactfully continuing with their marketing plans, and this helped them to come out successfully as one of the world’s leading producers of convenience foods.  

Another classic example is during the global economic crisis of 2008, when global FMCG giant Reckitt Beckiser, did not hop on the bandwagon of cutting marketing budgets during recession, but instead increased its marketing expenditure.  

The firm successfully launched a campaign persuading consumers to resume buying its more expensive and better-performing brands. In the face of reduced marketing activity by competitors, Reckitt Benckiser actually grew revenues by 8% and profits by 14%, when most of its rivals saw profit declines of 10% or more. They viewed advertising as an investment rather than an expense. 


While stopping marketing altogether is not the way to go, businesses do need to be conscious about the marketing tactics they deploy, to ensure that it resonates with current trends, and ensure they make smarter marketing decisions, instead of just cutting marketing budget in panic mode. 

The Covid-19 situation (as we can all too well remember) was a setback for many agencies and marketers, with the majority of marketing campaigns were either being paused or cancelled.  

One of the world’s biggest brands, renowned for its quirky and effective marketing campaigns, Coca-Cola, chose to go against the grain and launched the Open Like Never Before campaign after a short pause following the pandemic.  

The campaign was widely appreciated by its consumers and media critics alike, with Coca-Cola partnering with Mpanga, a London spoken word performer. 

It focused on how the lockdown changed the people around us and celebrated a time of social and cultural change post-pandemic – something many of us could identify with. 

One key takeaway from this is the importance of considering how your business will re-establish itself after a crisis, as the majority of the consumers will remember how a brand responded during said crisis. 

GsK conducted a survey during the pandemic, which found that a whopping 73% of respondents claimed that their future purchase of a product would depend on how that company presented itself during the covid crisis.  

The aforementioned examples suggest that even during an economic crisis, cutting marketing budgets during recession will see your business losing out to rivals.  

When Post decided to halt their spend, their lost their market share to Kellogg’s who were wise enough to continue with their marketing.  

This was an irreversible move for Post as they were unable to compete with Kellogg’s anymore and eventually vanished from the market battle.  

Resuming marketing activities, often proves more expensive in the long run as rivals will have already grabbed onto opportunities missed that you may have missed out on.  

In short, it’s crucial to continue to engage in marketing activities, to create multiple revenue options, while building trust and reputation among their audience. You may have to adapt your marketing strategy and make it work harder and smarter, but complete marketing silence is not the answer in the long run. 

To find out more about which marketing tacticsdigital or traditional, you could employ during the next few months to retain your market share, contact us.