Growing Your Startup During Today’s Economic Crisis
Generally, an economic crisis wreaks havoc on small businesses and local economies, all the way to multinational companies and even impacting a country’s economic growth trajectory. 2020 has seen its fair share of economic crisis; the impact of COVID-19 has led to what is now coined as the 2020 stock market crash.
A global recession was predicted in the early days of the health pandemic. Journalists such as Adam Tooze at Foreign Policy suggested, “It is too early to confidently predict the course of the economic downturn facing us due to the coronavirus. But a recession is inevitable.”
At times, economic recessions provide a platform for growth for companies and early-stage startups, especially companies focused on “building” while other companies are struggling to keep afloat.
Recessions often turn out to be the catalyst that refines and helps many companies make their big break. Startups like Uber and Airbnb were all founded during or immediately after the last global recession. For many companies a recession spells doom, but for many others who are open to change a recession can be an opportunity to expand. Economic recessions can increase the availability of great talent, cause a shift in value propositions and a change in work ethic especially in environments with high unemployment. The lack of capital caused by a recession can change the competitive landscape very quickly.
According to VentureBeat, “As it turns out, the last recession was actually a pretty awesome time to launch a company. Airbnb was founded in August 2008 and is currently valued at $35 billion. Pinterest, founded in December 2009, was last valued at $10.6 billion. Looking back through history, we can begin to notice a pattern that extends beyond the startup ecosystem: Uber, Apple, Microsoft, General Electric, IBM, General Motors, Burger King, CNN, and Disney were all founded during recessions.”
One key way that startups and growing companies can stay afloat and even succeed in an economic crisis is through pivoting in their digital marketing strategy.
The Role of Digital Marketing
Digital marketing has become the cornerstone of modern business marketing.
AMA’s most recently approved (yes, it changes!) definition of marketing is as follows: “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
Digital marketing has proven to be capable of weathering just about any storm that comes its way, but is it recession-proof?
Absolutely not. In fact, during an economic crisis, digital marketing budgets are at times one of the first to be cut. Digital marketing and creative agencies barely survive the initial impact and they are one of the first resources that startups with limited budgets cut off.
However, as a business that seeks to withstand a market downturn, digital marketing should be one of the key business functions that entrepreneurs should hold onto and grow. Without digital marketing your brand’s visibility is dead, and the chances of generating any lead or landing new customers are drastically reduced. In short, your stability will be jeopardized.
One of the reasons why businesses cut digital marketing during a recession is because they are unaware of just how important it is or the direct impact on conversion and revenue growth. It may seem logical to reduce an expense that you feel isn’t useful or yielding direct results. During an economic crisis or decline, digital marketing should be one of the first things you need to massively reinvest in, in terms of time and resources, whether through the use of a solid digital marketing agency or simply reinvesting in your internal marketing resources that are already within your core business stack.
Marketing During an Economic Downturn
How should your digital marketing strategy differ in an economic recession? At your core, one of the best strategies to deploy is to see digital marketing as an investment, not as an expense. A good marketing strategy during a market downturn will distinguish you from other businesses that are simply trying to cut as many costs as possible or are trying to survive. A good marketing strategy will:
- Help you increase the number of visitors to your website.
- Increase the visibility of your business.
- Grow your sales and conversions.
- Improve the overall profit margin.
A consistent need across any business type, whether during a recession or an economic boom, is an increase of customers. However, deploying a digital marketing strategy effectively should do more than simply increase the number of potential clients in your pipeline; to effectively create a marketing strategy, you need to know what your customers are thinking and most importantly how their needs are evolving through economic disturbances.
What are a few key things an early-stage startup or growing company should focus on while building or reinvesting in their marketing strategy during an economic recession?
Here are the Top 4 Areas of Focus an Early-Stage Startup Should Consider:
- Create targeted ad campaigns with a consistent theme
- Rebuild your website with your audience in mind
- Focus on driving conversions using social Proof and providing additional value
- Measure and track KPIs consistently
Create Targeted Ad Campaigns
One of the ways to successfully advertise and market your products and services is to understand the immediate or long term needs of your consumers and revisit your messaging with targeted ad campaigns. This is a marketing pro tip, especially in a recession, and is key to a successful marketing campaign.
Periods of economic crisis provide businesses the opportunity to focus on emotional messages, project confidence, and subtly reassure your customers about the future. Recently, Walmart announced that they will be closed on Thanksgiving day 4 months in advance of the actual holiday. Why was this announced far in advance of when people typically start planning their Thanksgiving Holidays? According to Bill Murphy Jr. of Inc Magazine, “… I do see something else that should be the goal of almost every business right now: Projecting certainty and reassurance about the future.”
During a recession, there is usually uncertainty in the air, and consumers can’t help but worry and be fearful about the future. As a business, you need to tap into this situation and appeal to the emotion of consumers. Appealing to their emotional side will show them that you understand what they’re going through and allows you to create a deeper connection with them.
A video ad tech company, Unruly, ran some interesting studies focusing on a consumer’s emotional responses to certain ad commercials. One commercial, created by a company called “Uncommon” scored highest in regards to viewers who were “intensely moved by the content.” This ad also impacted the view of the brand, “39% of viewers having a more favorable view of the brand.”
In addition to revisiting your messaging by creating targeted ad campaigns specifically catered to the current situation and appealing to your audience’s emotion, you can optimize your ad campaigns by specifically target locations that provide the best ROI, adjust your ads’ schedules to accommodate people’s own shifting time changes and target device types that may perform better than other.
Rebuild Your Website
Have you been putting off rebuilding a website because you’re worried about the impact it will make on your businesses workload? Rebuilding or establishing a better web presence is a great way to tie in your digital marketing campaigns with potential deliverables, especially if your business has a predominantly physical presence. Web design and development, whereas a category all in it’s own, is a major part of your overall digital marketing plan. All digital marketing efforts should end with a submission form, landing page, or website as the final endpoint of a consumer’s journey.. The branding of that “endpoint” should be consistent with the look and feel of your other marketing efforts in a way that leaves your audience clearly seeing the direct connection.
One example of a company rebuilding its web presence in the face of an economic downturn is DigiDay Media, an online publisher and online trade magazine for online media. During COVID, they announced the launch of a new website, “Our new site is not a result of the Coronavirus dislocation, but it is a way of us adapting to the changed needs of our audience and our own evolution as a company. When we last refreshed our site, Digiday had a single brand. We now have three. Back then, we did not have a membership program; now we have three across all brands. We needed to adapt our experience.” Digiday’s new website announcement was aimed at addressing the pandemic by reiterating their background and their mission within an industry that is undergoing challenges.
Having a dip in clients may allow you to start working on essentials you may not have had the opportunity to do before. Before starting to rebuild your website, think of the following:
- Is it time for a re-branding? Does your color palette, logo still ring true to your customers as it did before? How does it connect with your other branding efforts?
- What platform do you want to build on? Are you already built on Wordpress and too nervous to move? Or maybe you’re ready for the next wave and decide to build on Webflow, a tool that allows you to build responsive websites in your browser.
- Have you refined your mission or offerings? If so, it might be time to revamp your website’s structure including additional subpages.
During a specific economic or crisis, add a temporary website banner, a business continuity post, or even provide alternative contact details especially if your businesses’ working hours and locations have been impacted. Not only are these practical next steps in addressing web development changes, these are critical steps businesses should take in pairing with your digital marketing efforts for full impact.
Focus on Driving Conversions through Digital Marketing
Conversion rate optimization is an additional strategy to utilize as you focus your digital marketing efforts on during an economic crisis. What is conversion rate optimization? According to Hubspot, “Conversion rate optimization, or CRO, is the process of enhancing your website and content to boost conversions. A high conversion rate means your website is well-designed, formatted effectively, and appealing to your target audience.”
In a nutshell, conversion rate optimization is a way of increasing the percentage of website visitors that convert into paying customers. It is a marketing technique that’s cost-effective with a high impact. There are many ways, using technical or creative means, to increase your conversion rate, however, two immediate ways you can optimize your conversion rates is through social proof and providing extra value.
Social proof is the time-tested concept that says audiences and people will follow the actions of other groups. A widely used example is choosing the restaurant with a fuller capacity than the one that is emptier based on the assumption that more people means better food. Content such as case studies, testimonials, and recommendations represent your company’s social proof. Have you been utilizing this content effectively? Doing so is important for driving conversions within your digital marketing strategy. Social proofs and positive stories should be used wisely to give veracity to your social marketing in addition to driving overall conversions.
Providing Additional Value
The focus of digital marketing is usually to drive more profit to a business, not to give things out for free. However, in the case of a market downturn, offering something for free or providing something additional as an “added value” may improve your lead generation. Through your social media, offer customers free tips and give them useful information relevant to the times. Not every opportunity has to yield an immediate return to be valuable for your bottom line. Some opportunities strictly serve to attract more customers and build customer trust, which will benefit the business in the long run.
Measure and Track Everything
Have you been putting off tracking your marketing investments? If so, now is the time for a jumpstart. Measuring and tracking these activities will help you manage your digital marketing investments more effectively. Every marketing investment you make should have a measurable ROI that you can track the progress of.
Digital marketing is not a one size fits all system, there are numerous strategies you can use that will give you guaranteed ROI during a recession. As you track your recession marketing efforts, you will need to tweak strategies that don’t bring the expected results and try different ones. The system is simple; test, tweak, and repeat.
The time of debating about the superiority of digital marketing is long gone. Digital marketing has been established as the best marketing strategy with low-cost and high-return. It is a marketing strategy that allows you to measure your reach and the effectiveness of your methods. during a recession is not the time to cut down on digital marketing, it’s the time to use it to reach more people and position your business in a visible place where your services are difficult to ignore.
More Resources for Your Business
Running a business is hard enough, let alone successfully running one during an economic crisis or a pandemic. There are many organizations that can help your business with resources, including government grants, third party assistance programs.
The following is a list of websites that can provide your startup with additional resources.
- Coronavirus (COVID-19): Small Business Guidance & Loan Resources
- Staying Connected with Customers Through COVID-19
- TechCrunch COVID-19 Updates
- Latest on Coronavirus from NFIB
About Joanna Kurylo:
Joanna Kurylo is Vice President of Business Development at Intellectual Digital Business Builder and Senior Advisor at Intellectual Digital Corp and Intellectual Digital Global. She is also a member of iDG’s Investment Committee.
Joanna is a business development professional who specializes in developing sales, revenue, and corporate partnership strategies for startups and growing companies.
About Intellectual Digital Companies
The Intellectual Digital Companies (iDG, iDBB) incubate, build, and invest in new technologies, software solutions, technology platforms, and emerging sciences. The iD companies include: Intellectual Digital Global (iDG), and iD Business Builder (iDBB). Intellectual Digital Global (iDG) successfully developed from previous ventures: Intellectual Patents Inc (IPI) and Intellectual DigitalTM Corp (iDC). iDG is a private operating conglomerate that acts as a ‘Launchpad’ for new technologies, software solutions, technology platforms, and emerging sciences. iDG through its builder platform, iD Business Builder, provides global executive and management support, creative strategy, branding and advertising development, sales and marketing resources, and financial management to growing start-ups and early-stage companies. Intellectual Digital’s management has a history of founding and building successful businesses globally. The Intellectual Digital Companies was founded by Adam Harrington and Norman Rothstein.
Disclaimer: Please note, the opinions of the writer expressed in this document do not necessarily reflect the views of Intellectual Digital Companies or its partners.