We’re living in uncertain times, something that isn’t too foreign for many of us who weathered the storm of the last three years, and not to mention, prior economic booms and busts in our lifetimes.
The global economy is going through an unpredictable phase. Daily headlines have some economists vocalizing that a possible recession could occur within the next few months, while some experts believe it has already started.
Our current reality shows spending capacities are lower, and businesses are beginning to slash budgets as revenue generation takes a dip. We’re seeing companies curtail spending on marketing and PR activities to avoid aggressive spending to track toward a new goal of communicating to the market with the least possible spend.
The media is feeling the pressure of a weakened advertising landscape – triggering a recent wave of layoffs– some resulting in the shuttering of entire newsrooms.
Agencies are feeling the heat as clients shift to more project-based work and reduced budgets. Everyone is under constraints, now more than ever.
So, is it wise to spend money on PR during an economic downturn? If we’re in the midst of economic uncertainty, shouldn’t the obvious answer be to pause spending? The clear answer is NO.
What PR Can Do During Economic Uncertainty
Despite hard times, companies still need to build brand awareness and maintain credibility and trust. A company’s response during an economic downturn can significantly impact its business in both the short- and long-term.
Despite the human reflex to cut budgets, reduce staff, save more and wait for economic conditions to improve, companies need to acknowledge the opportunity to increase market share during a downturn.
History has shown time and time again that companies that increased their share of voice by maintaining or increasing their PR spend during past downturns always got ahead; they ended up capturing market share from those that buried their heads in the sand.
Take General Mills as an example. During the 2008 recession, General Mills remained bullish on communicating its brands’ value. Despite the trend for consumers to tighten wallets and look for cheaper alternatives, General Mills was able to stay ahead of its competitors. And today, while some companies are tightening their belts as a precaution, General Mills is adopting a contrasting approach by upping its investments and acquisitions.
General Mills is just one example. After the last recession, Harvard Business Review conducted a study of 4,700 companies across all industries. The study found that companies that cut costs faster and deeper than rivals did not flourish. Instead, they had the lowest probability of pulling ahead of the competition when the economy improved.
Companies that continue to communicate and engage with stakeholders in meaningful, relevant ways can build mind share and further drive business, while those that reduce or stop their PR efforts are often left out of new business opportunities and partnerships, and left out of purchasing decisions. Companies that use PR during challenging times can also project to relevant stakeholders the image of corporate stability, which in turn builds long-lasting trust.
No Budget? Still No Excuse.
Work with what you have and start small. Not every company has a robust budget to cover the expense of a PR agency or building out an in-house team, but there are still actions leaders can take during times of economic uncertainty.
Social media platforms are the most powerful free tool out there. If you don’t have a dedicated media relations expert to pitch reporters, leverage LinkedIn for thought leadership pieces. Using social media as a PR tool can be an effective way to reach and engage with target audiences, build brand awareness, and maintain a positive online reputation. Because at the end of the day, PR is about leading with value, communicating your company's message, and showing consumers who you are and how they can benefit from your products or services in some way.
Remember that PR is not just restricted to influencing the sales and revenue of product and services. It also impacts the overall image of a company in the market. It is designed to create the maximum impact on the perception of the consumer. And where other marketing activities have a limited scope of influence on the market for a shorter duration, PR leaves an enduring impression on consumers’ perception.
When the economy is down but competition remains fierce, PR is the most cost-effective marketing tool to keep your company’s name in the forefront of stakeholders’ – including current and potential customers’ – minds. Big budget advertising is often cost-prohibitive during uncertain times, but a PR dollar can stretch far and wide, creating long-lasting impact.
Cutting PR may provide some short-term relief to profitability, but the subsequent loss of market share that follows will be extremely difficult and expensive to regain during the recovery.
Jennifer Risi is founder & president of The Sway Effect.