How Small Businesses Are Leveraging Digital Marketing During the Economic Downturn Survey
Table of Contents
The economic downturn of 2020 is considered to have been more damaging than the last major downturn of 2008. While the Great Recession of 2008 was largely market-driven, the 2020 recession was from the economic disruptions caused by closures and restrictions associated with the pandemic. Because of the economic uncertainty the pandemic caused in 2020, businesses across industries responded by reducing discretionary spending.
Marketing budgets were one of the most slashed budget items during the 2020 recession. As the economy began to rebound in mid-2021 and 2022, marketing experts started strategizing and reimagining campaigns around new marketing tactics as they watched customers adopt new consumption habits in response to the new economic normal.
While UpCity has covered how the pandemic affected the marketing industry extensively, we’re looking at how businesses are evolving their digital marketing tactics as the U.S. economy turns the final corner of 2022 into 2023.
UpCity recently partnered with Pollfish to gather data from 500 U.S. small business owners that reveals how owners have changed their approach to digital marketing and where they are focusing their marketing resources because of the recession.
We’ve divided our analysis of the data according to:
- What areas of digital marketing are companies focusing on
- Changes in the dedicated budget and marketing investments for digital marketing
Where Companies Are Focusing Their Digital Marketing Efforts
As with previous recessions, discretionary spending is on the chopping block for many businesses looking to insulate themselves against the looming economic uncertainty many experts claim will evolve into a full-blown recession if conditions don’t change. While many companies plan to include marketing in their cuts, our survey reveals that a significant percentage of businesses are shuffling their marketing expenditures rather than cutting across the board. Our Pollfish survey explores this restructuring in marketing campaigns and how marketing professionals prioritize different tools to maximize outcomes.
27% of small businesses are using social media to reach more customers during the economic downturn
According to our survey with Pollfish, the threat of another recession has marketing experts reassessing their marketing mix and prioritizing several channels to grow their core client base. Building business ahead of the anticipated downturn will provide a stronger foundation to navigate and survive the anticipated hit to the bottom line. Of the marketing channels in play, more than a quarter of our respondents are prioritizing social media to connect with and build relationships with new potential customers.
This shift to social media channels relative to other marketing channels stems largely from the pandemic-driven closures and working arrangement restructuring that prioritized remote work, flexible work schedules, and work-from-home solutions that have continued to persist into 2023. During this time, marketing experts watched as social media usage grew significantly.
Studies show that in the early months of the pandemic, a majority of social media users increased the time they spent on social media by as much as one to two hours a day. This increased daily usage translated to an overall increase in social media use of 10.5% from July 2019 to July 2020 had several significant effects on how consumers shopped and interacted with businesses.
Work arrangements remain in flux as some major companies are calling for a full return to work while others recognize the benefits and advantages of allowing employees to continue working under flexible arrangements as needed. Research shows that social media platforms, especially LinkedIn and Facebook, continue to see increased activity as consumers rely on social channels both for researching brand alignment with their values as well as to share their experiences and connect with brands directly.
Because social media channels are largely where consumers have their attention focused right now, with no indication that that will change, it follows that social channels will be the digital marketing channel a majority of businesses will shift to increase customer headcount and improve brand awareness.
27% – Social media
6% – SEO
15% – Paid advertising
12% – Content marketing
11% – Video marketing
16% – Email marketing
5% – Demand generation
7% – Affiliate marketing
1% – Other
While it revealed shifts in new directions, this portion of the Pollfish survey also revealed that sometimes even the most tried and true marketing tactics remain invaluable no matter the economic climate. Despite all of the technical advances that have been made and the level of automation now possible, email marketing continues to be a focus in many marketing campaigns, as it continues to deliver one of the highest ROIs of any other digital strategy.
In the months following the outbreak of COVID-19, marketers leveraging email campaigns saw a 31% year-over-year lift in open rates and a 22% increase in conversion rates over the same period.
While paid advertising remains a staple in most businesses’ marketing plans despite chances of a recession, video marketing, and content marketing are emerging as preferred channels for reasons similar to why brands have shifted towards social media—consumers’ eyes are already on these channels. Social channels are more than just methods for connecting with peers and making service inquiries.
They have emerged as the ideal delivery channels for educational and informational content. In 2022, studies have shown that 54% of consumers want more video content from the brands they support. Research from a 2022 Hubspot study supports our survey’s findings that marketers planned to increase their content marketing budgets throughout the year versus 2021, with 66% of their respondents expecting an increase in content marketing spending.
A majority of small businesses are aiming to reach customers in more locations during the recession via social media
While there are several tactics brands can use to recession-proof their income streams, our survey revealed that a majority of our respondents are balancing the expansion of their existing customer base against methods for retaining their existing clients. When asked which goals are most important overall, those surveyed responded with tactics largely focused on methods that expand the scope of their current client acquisition channels. Largely an outgrowth of the fact that the pandemic has decentralized businesses, business owners are looking to decentralize their client bases to capture additional market share.
Many respondents plan to increase social media marketing efforts in the face of a recession with LinkedIn, Facebook, TikTok, and other social platforms to expand their client reach. Tweaking their brand’s online presence will also help them attract new audiences and improve brand online visibility.
(On a scale of 1-10, 1 being the most important)
5/ 10
Reach more customers in various locations via social media
5.1/ 10
Retain existing customers
5.2/ 10
Grow my business quickly with paid ads
5.2/ 10
Boost my brand’s online visibility
5.2/ 10
Target new audiences
5.3/ 10
Improve my mobile site/presence
5.7/ 10
Rank higher on organic search results via SEO
5.7/ 10
Find more consumer data via market research
5.8/ 10
Create a faster-loading, more user-friendly website
6.8/ 10
Other
Keywords aren’t only the purview of paid advertising, especially given the changes that have been made in the last few years to the Google search algorithm to prioritize client search intent.
To attract and engage with clients in new areas or from different demographics than those originally targeted by the website, businesses are restructuring and formatting their on-page search engine optimization (SEO) as well as their content-based SEO strategies to expand targeted marketing efforts to reach new geographic areas and new demographic groups.
Aside from expanding brand visibility and reaching more customers, their SEO improvement efforts have also encompassed improving site performance to improve search engine results.
14% of respondents are measuring the success of their digital marketing campaigns by the number of returning visitors to their websites
The economy began to turn the corner of recovery in early 2022, but that recovery is feared to have come too late, as analysts are equating massive inflation and other indicators across the market with an impending economic downturn. So close on the heels of the 2020 pandemic-driven recession, the economy has had little time to heal, and already brands shore up what financial ground they’ve made up over the last few months.
Because of the uncertainty in the economy, it’s hard to utilize sales metrics as the sole indicator of success in current marketing campaigns, as the ultimate goals of business owners aren’t purely profit-driven. The pandemic taught business leaders to adapt and evolve, but it also made it clear that long-term success requires owners to take advantage of times when profitability is strong. Reinvesting profitability when the market allows owners to act from a growth mindset, and to prioritize business strategies that will sustain them through leaner market conditions. This approach has businesses focusing on traffic and engagement on a level equal to their focus on sales and conversions.
Why should business owners be focused on attracting and converting clients for long-term nurture and repeat business now instead of trying to do so during the recession? Aside from the obvious shifts, analysts are anticipating in consumer behaviors, the fact is that any downshift in revenue streams will make new client acquisition a cost-prohibitive activity when taking into account that new customer acquisition is about five times more expensive than the costs to retain an existing client. Creating vetted and qualified traffic and building those relationships into repeat business will ensure that conversions will naturally increase.
The same studies into the costs of customer acquisition show that increasing customer retention by even 5% can increase profits by more than 25%, and it’s 60% easier to sell to that customer than it is to a new customer. These numbers make it clear that building client headcount when customers are willing to try new brands and be more open with their purchasing activities is the strongest approach so that when a recession hits, you already have an established relationship with a majority of your existing clients.
13% – Total website traffic
12% – Sales metrics
6% – Keyword/Organic rankings
11% – Channel traffic (social, direct, organic, referrals)
6% – Bounce rates and/or average time on page
8% – Conversions
12% – First-time visitors
14% – Returning visitors
8% – Cost-per-click
9% – Online brand mentions
Budget costs and investments for digital marketing
Understanding how business owners and marketing professionals are restructuring their marketing efforts was only part of the narrative we wanted to explore with this Pollfish survey. The remainder of the survey queried respondents about their marketing budget before the market conditions of 2022 many are considering to be the onset of a possible recession, how their budgeting for digital marketing evolved in 2022, and what their approach will be in case the recession conditions continue into the coming year.
35% of small businesses had a monthly digital marketing budget of $500-$1,000 before the economic downturn. The data shows that businesses’ budgets were largely determined by their revenue levels
When we consider pre-recession digital marketing budgets, we have to take into account that our Pollfish survey focused primarily on gathering information from small business owners. This by the inherent sizes of a small business set the lower and upper limits of the budgetary information we gathered from respondents. A majority of our respondents had dedicated digital marketing budgets before the recession of $500-$1,000, with the bulk claiming their digital marketing budgets to be either less than $500 or falling between $1,001-$2,500.
When you break down the survey respondent feedback according to annual revenue levels, the spread becomes an interesting foundation for the remainder of our analysis. Pre-recession figures as a baseline show a somewhat predictable trend in that the smaller the revenue stream, the lower the monthly budget for digital marketing. It isn’t until we look at how businesses adjusted their 2022 budgets when signs of the recession started to become noticeable across the economy that we start seeing interesting shifts in digital marketing budgets relative to a company’s revenue stream.
Overall Breakdown Pre-Recession
25% – Less than $500
35% – $500-$1,000
25% – $1,001-$2,500
10% – $2,501-$5,000
5% – $5,001+
32% of SMBs still have a $500-$1,000 monthly budget. However, this further varied when breaking responses down by annual business revenue
Before breaking the data down against annual revenue, we see a slight shift in the midrange of our respondent data, with a 3% increase in companies budgeting less than $500 matched by a similar decrease in respondents budgeting between $500-$1000. This shift became clearer in the breakdown relative to annual revenue levels.
For businesses with revenue streams of less than $500,000, there was an increase of 4% in the number of respondents dedicating less than $500 monthly to digital marketing. At the mid-revenue point for small business respondents, with businesses showing revenues of $500,000-$2 million, a 45% majority in that range prior to the recession budgeted between $500-$1,000. In 2022, those same companies made a shift upward in their marketing budget, with a wider spread meaning a lower majority percentage of 34% now spending between $1,001-$2,500.
For businesses generating $3 million to $5 million in revenue, the opposite occurred, with a pre-recession majority of 57% of respondents spending between $1,001-$2,500 a month on digital marketing. In 2022, companies in this revenue range downshifted spending enough that the majority at 41% were only spending between $500-$1,000 on monthly digital marketing.
While a majority of businesses generating $6 million to $9 million continued to have an ad spend between $2,501-$5,000 on a monthly basis, that majority percentage was diluted as companies shifted spending tactics and the percentage shifted from 44% of respondents to only 38% of respondents at this revenue level. At the top end of our revenue range, companies generating $10 million or more in revenue saw a significant downshift and a wider range in digital marketing spending. Before the recession, a majority of our top revenue-generating respondents were spending more than $5,000 per month in marketing spending, while in 2022 the majority of companies at this level were only spending between $1,001-$2,500 per month.
Overall 2022 Breakdown
28% – Less than $500
32% – $500-$1,000
24% – $1,001-$2,500
11% – $2,501-$5,000
5% – $5,001+
38% of SMBs plan to continue their traditional marketing efforts throughout the recession while 22% of respondents plan to increase their use of direct mail
The inconsistent shifting percentages across budgeting tactics shows that many brands aren’t sure how to respond to the coming recession. While many are trying to strike a happy medium, marketing agencies and economists talked about how businesses should continue to advertise and focus on marketing throughout the coming recession, as it is a healthier approach for mid-to-long-range success.
This can largely be attributed to what the article discusses as the advertising lag phenomenon, which is the gap in impact between when ads are run and the return on that investment is realized. Their advice can be summarized as ensuring a majority of your marketing budget is targeted at long-term brand-building tactics and the remainder on short-term tactics that can be adjusted and adapted to market conditions.
For the first time in ten years, the CMO survey released in 2022 revealed an increase in traditional advertising spending. The growing appeal of traditional marketing channels has been attributed by experts to the numerous growing technical challenges in executing digital campaigns, growing distrust of digital marketing, and changes in cookie-tracking on major technology platforms casting doubt over the future of digital strategies.
Because of technological advances, the lines between digital and print or other traditional channels have blurred enough that when the funds become available, it makes sense for some marketing professionals to diversify their efforts.
A majority of our respondents seem to understand the importance of remaining focused on marketing and diversifying their strategic approach, with 75% of respondents either maintaining current traditional marketing budgets alongside their digital marketing efforts or increasing their traditional efforts to augment client lead generation.
37% – We plan to increase traditional marketing efforts alongside our digital marketing
38% – We plan to maintain our traditional marketing efforts
24% – We plan to decrease our traditional marketing efforts to focus more heavily on digital marketing
1% – Other
Traditional Marketing Methods to Increase
16% – Outdoor (Billboards/signage, etc.)
20% – Print advertising (Magazines, Newspapers, etc.)
19% – Broadcasting (Television, Radio, etc.)
22% – Direct mail (Catalogs, Brochures, etc.)
14% – Telemarketing
9% – Trade Shows
1% – Other
Because consumers are not working under traditional work arrangements across the board, they can be found working in remote work settings, from home, and in shared workspaces. Because they’re working in spaces where they can easily reach, traditional marketing tactics such as print and broadcasting channels are natural choices for marketing specialists to increase. Direct mail continues to be a focus for some of our respondents seeking to bolster digital media with traditional marketing, as the visuals can be matched up easily to match the branding consumers have been conditioned to through digital channels.
In contrast, 20% of respondents are decreasing their use of both direct mail and print advertising
Not all of our respondents see the value in the same traditional channels. Those who are reducing spending point to print advertising and direct mail as opportunities to redirect budgeting to more impactful channels or other business processes that will sustain the brand through the recession.
Your Recession-Ready Digital Marketing Plan
While there is no way to fully recession-proof your business, our Pollfish survey of 500 U.S. small business owners shows that you can at least set a more stable foundation from which to navigate uncertain economic conditions. That foundation should be built around traditional digital practices such as email marketing and paid advertising but also a tactical approach to social media marketing bolstered by a solid content marketing and video marketing strategy.
Whether you bolster this approach with traditional marketing strategies such as direct mail marketing and print advertising depends on the types of client groups you’re trying to attract beyond your existing ideal customer.
Regardless of the approach you choose to take, your focus in the coming months needs to be on preparing your business for the chance of a recession. If your team isn’t prepared to restructure your digital marketing strategy to prepare for the uncertain economic conditions ahead, you can find a marketing consultant through our B2B marketplace of service providers that will support your team’s efforts to maintain operational continuity despite potential disruptions in your revenue stability.
UpCity’s Survey Method
UpCity used Pollfish to survey 500 U.S. small business owners of all adult ages. Fifty-five percent of the respondents are male and 45% of the respondents are female. A majority of our respondents are 35-44 years old (34%).
About the author
David J. Brin
Having recently escaped a 20-year career in Food & Beverage operations management, David is now a Facility Director for a Code Ninjas franchise, a STEM-education concept that uses game development to teach children how to code in various programming languages. David got his start writing professionally as a communications assistant for the Federal Reserve Bank of Richmond, and has been a freelance copywriter providing white-label services to clients since 2016. His clients operate in industries ranging from managed IT services and software development to marketing and advertising.
