The "do more with less" marketing era

Life and business operate in cycles.

Since 1980, the US has gone through several recessions (i.e. a shrinking economy - including declining GDP growth and spending, and increasing unemployment):

US RECESSIONS SINCE 1980

• 1980 - Inflation caused the Fed to raise interest rates (sounds familiar?)

• 1982 - Higher interest rates coupled with decreased oil exports spiked prices

• 1991 - High interest rates and the Gulf War (and decreased oil) again spiked prices

• 2001 - The dotcom bubble burst and the terrorist attacks of 9/11 happened

• 2007 - 2009 - The housing market crashed, taking banks, insurance and car companies with it

• 2020 - We endured a global pandemic

Interestingly - if you entered the workforce in the last 14 years, you have only experienced one recession during your business career (which is largely considered a deep, but short one).

However, if you spend time reading LinkedIn posts, working in B2B SaaS, in industries impacted by the dynamic return-to-work landscape, or have friends or family who have been laid off and are looking for work - nothing about this time will seem short.

It's important to understand the underlying forces behind the market contraction we are seeing in certain segments, and to craft strategies for how to deal with it, if you've been directly impacted.

WHO, WHAT, WHY

As the economy contracts and expands, that are always financial and strategic implications for investors, businesses and employees.

INVESTORS

At the end of the day, investors are looking for ways to grow their capital. For every $1 they invest, they expect more than $1 in return. Their goal is to minimize risk and maximize profit, over a period of time.

When the economy contracts, interest rates are high, and it's uncertain how long this will go on, you will see a relatively standard set of behaviors:

1. Liquidation of risky assets and money being moved into "safer" places

2. A focus on profitability and cash flow

3. Investors will have very high expectations on where to place their dollars (see #1 and #2 above)

There are numerous types of investors - individuals, banks, venture capital, private equity, and the list goes on. Each has a slightly different risk tolerance, time horizion, and set of goals they seek to acheive. However - all of them want to minimize risk and maximize profit.

BUSINESSES

At the end of the day, businesses are looking for ways to profitably acquire and retain customers through the creation of compelling products and services. They typically raise money from a variety of investors - individuals, banks, VCs, PE, or others.

These businesses have a fiduciary responsibility to their investors to make the best possible decisions with the dollars they have received, and to regularly provide updates to their shareholders and board members on their performance and strategies.

When the economy is growing, interest rates are low, and your company is doing "well" - it's easier to raise money and sell the vision of where your company is headed. Companies are not always expected to be profitable when they are in a market-capture or growth-stage - the goal is to build a product or service that a large group of people are willing to pay for. If you can prove that to be true, then systemic changes can be made over-time to get to profitability. Investment dollars help companies bridge that gap.

When the economy contracts, interest rates are high, and it's uncertain how long this will go on, you will see a relatively standard set of behaviors:

1. Companies will be forced to slow burn and retain cash

2. Cuts to expenses are likely - including variable costs (i.e. sales, marketing, R&D) and headcount

3. They will work to survive the contraction, and wait to add growth levers when the market bounces back and investment dollars are easier to attract

EMPLOYEES

For workers, this is a stressful time. You want to do good work for your company, be recognized and rewarded for your efforts and impact, and provide for yourself and your family.

When the economy contracts, interest rates are high, and it's uncertain how long this will go on, you will see a relatively standard set of behaviors:

1. You will be asked to "do more with less", and the expectations and pressures will be high

2. You will worry about your own job and those of your family and friends

3. You will learn a ton from this experience, and use it to inform your future choices when the next, inevitable downturn hits the economy

The "do more with less" marketing era is one that has happened before, and will happen again. While it's ok to feel stress and pressure in the current climate, I can also tell you from experience that:

• Necessity is the mother of invention - when all you have left is your teams grit and creativity, good things can happen

• If your company survives and goes back into growth mode, you and they will be stronger for having learned through the experience

• If you are impacted and looking for work - it's temporary. Some of my most successful colleauges in business were once in that position

And last but not least - there is good news.

While a May Gartner survey found that 71% of CMOs felt they lacked sufficient budget to hit 2023 goals, Forrester reports that 80% of marketers expect their budgets to increase in 2024. And 84% of tech leaders expect increased budgets next year.

Companies expect to spend heavily in digital/website experiences, increased creative and content production, AI-enabled technologies, data science and analytics.

The expectations for growth will not slow, but relief and a growing economy appear to be on the horizon.

Wish you and yours all the best as we enter a new, upward cycle. 

Larisa Summers is a fractional CMO and founder of True Circle Marketing.