Co-founder of The Abbey Agency , a full-service agency specializing in creative, digital and public relations in travel and tourism, technology and public affairs.
When news of an economic downturn hit, businesses in all sectors looked for ways to cut budgets. This is especially true for the technology industry. We've seen all the headlines. Funding sources for technology startups are "drying up". Money supply falls to historic lows. More than 250,000 tech workers have been laid off by some of the biggest names in tech.
As technology companies look for ways to weather this economic storm, visionaries will look to their company's goals and redeploy their efforts to new, innovative initiatives. However, there is one important aspect of business operations that tech companies must prioritize during economic downturns: marketing and advertising spending.
When budgets are cut, for whatever reason, marketing and advertising costs go first. It's a cliché at this point. Nielsen experts reported that ad spending in the second quarter of 2022 decreased by 7% compared to the second quarter of 2021. Before technology companies start to feel the effects of the macro climate, their signal budgets are already exhausted.
However, cutting back on advertising and marketing is not the best strategy for tech companies, especially those that focus on customer acquisition and retention. An economic downturn is a good time to thoroughly analyze the customer market and determine the best strategy for the future.
Innovation means nothing if customers don't know about it
Any technology company seeks to innovate for its existing and potential customers. But as the old saying goes, "out of sight, out of mind." This is true for any business during an economic downturn, especially for the technology industry.
By reducing their visibility and voice in the marketplace, tech companies risk losing ground to their competitors when economic pressure eases. When tech companies stop communicating their innovations to their audience, they seem stagnant.
In addition to informing customers about your company's current technology offerings, regular communication gives your target market a picture of innovation and strength. Instead of being weak and stagnant, you can establish yourself as a leading voice in your industry.
Advertising: Technology helps reduce costs
It is important to remember that customers of technology companies are also affected by recessions. As budgets tighten, customers must make tough decisions about which products and services to keep in their workflow. If the products of a company's technology stack do not directly contribute to revenue, it may be at risk. This makes the business environment significantly more competitive. Technology leaders need to be proactive and involved in generating new leads, which makes marketing and advertising spend even more important.
An economic downturn of this magnitude can cause major changes in your marketing strategy. The pool of potential customers will shrink, but may change completely. Existing marketing channels may not be the "right" channels to reach new customers. For this reason, reinvestment in advertising can also mean a complete change in advertising strategy. Despite the challenges that economic instability presents, it is a priority for marketing teams, however small, to become introspective about how they can refine their strategy. For example, Netflix emphasized partnerships during the 2008 recession, working with companies like Xbox to expand the reach of its newly launched streaming service.
If this economic environment is full of thorns, it is not without flowers. slowdowns affect advertisers as well as businesses targeting potential customers This makes media companies and advertising channels more likely to offer discounted rates or special offers to attract business. Technology companies can get more bang for their buck by investing wisely in targeted and effective marketing campaigns with the right partners.
Promote technical talent, not just technical clients
Tech companies primarily advertise to connect with customers, but many overlook the importance of advertising to connect with potential talent. Google your location and you'll see what I mean. The number of similar roles at tech companies is almost unimaginable, and it's all too easy to get lost in the competition.
Despite the current layoffs at tech companies, the demand for skilled tech professionals will always be high. By allocating marketing budget resources, technology companies can effectively communicate their brand image, corporate culture and career opportunities to potential candidates.
A strategic marketing approach enables companies to demonstrate their sustainability, innovation and long-term growth potential, alleviating potential employers' concerns about job stability in times of uncertainty. For example, marketing efforts in publications read by tech talent, such as targeted advertising and thought leadership content, help build a strong presence in the job market, stand out from the competition, and attract new hires. Talented people who are changing careers and looking for meaningful work.
It's time to advertise—even in a recession
Simply developing innovative products is no longer an exceptional quality for technology companies in 2023. This is the key. The next step is to invest in effective promotional strategies and get your offers to your target audience. This will help you expand your business reach during downturns – more than industry players who only focus on innovation, not communication.
While it may be tempting for your tech business to limit advertising and marketing during a downturn, doing so can be short-sighted and hurt your bottom line. By investing in marketing initiatives and defining the right message through internal analytics, companies can stay competitive, stand out from the competition and become stronger. Companies that carefully assess customer needs, carefully manage their marketing budgets, and flexibly adapt their strategies, tactics, and product offerings to changing demands are more likely to succeed during and after economic downturns.
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