Social Media and the Economy: How to Do Social Media Marketing in a Recession
When the economy dips, social media marketing can continue with business as usual, right? Not quite. While general activity on social media will carry on until the apocalypse itself, during a recession, the way that brands approach their marketing strategies should shift in accordance with changing consumer moods. In other words, brands should really “read the room”.
While we’re not officially in a recession, consumers are feeling the effects of economic uncertainty. This can affect the availability of money and therefore how consumers behave and their purchasing decisions. In fact, the potential for a recession has already led to 30% of US consumers purchasing less and spending more wisely. This means cutting back on ‘discretionary spending’, which covers all non-essential goods and services.
So, how should luxury brands navigate recession marketing? How should they speak to customers and adjust their marketing budgets, while still getting their products to sell? Keep reading, because we discuss all things social media and the economy below.
5 Things To Consider When Marketing in a Recession
At a glance, the luxury industry seems to be doing just fine. It’s expected to continue to grow at an average rate of 5 to 7% a year until 2030. Luxury spending habits appear to have returned to pre-pandemic levels, however, during recessions, consumers tend to prefer to spend more on luxury experiences rather than goods. This makes it a bit trickier for luxury goods brands to make sales, which is why it’s important to know how to adapt to the changing market and press on.
1. CHANGING CONSUMER BEHAVIOR
As we touched on above, consumer behavior tends to become more cautious during periods of recession. With less money available to spend, they typically set aside cash for essentials, such as food, rent, home, bills, and so on. That leaves less money to spend on the non-essential ‘nice-to-haves’.
With consumers holding off on these kinds of purchases, they’ll be less likely to engage with ads from luxury goods brands and even less likely to make a purchase. But that doesn’t mean that luxury brands should call off their social media ads, far from it.
Instead, brands should revise the kinds of campaigns they’re putting out. Rather than pushing a blanket campaign that attempts to sell everyone on a product, brands should instead shift their focus onto retargeting and remarketing paid social media campaigns.
These campaigns specifically target past customers as well as leads who have interacted with the brand or shown genuine interest in making a purchase. Both of these customer segments have a much higher chance of converting because they have demonstrated that they’re willing to spend on luxury goods.
In fact, retargeting ads are so effective that they’re the most used among marketers, with 77% of both B2C and B2B marketers using retargeting strategies for Instagram and Facebook.
2. TARGET AUDIENCE PRIORITIES
With the priorities of your target demographics shifting, luxury brands need to keep up. Younger audiences especially—who are a core part of the luxury customer demographic—are feeling the effects of the economic downturn. Around half of Gen Zs have said that they’re “extremely worried about not having enough money”, meaning they probably won’t want brands to keep pushing a hard sell.
So, a good tactic for luxury brands to employ during this time is to focus on building and strengthening customer or audience connections and relationships. User-centric campaigns, such as the use of UGC, or giveaways help to engage users without actively selling to them. This way, those that do have the available cash to spend will be more likely to spend it with the brands they’re most engaged with, while those that don’t will be more likely to once they’re more financially secure.
A great example of UGC done right was the Calvin Klein #MyCalvins campaign. The luxury brand encouraged its customers to share photos of themselves in their CK products, which drew in participation from everyday customers, to bigger influencers. For those interested in buying the products they saw through these UGC images, Calvin Klein linked them on their website. It helped to drive sales while resonating strongly with their audience.
3. PRICING AND PROMOTIONS
Lower prices or special promotions can help to make products more affordable to a wider audience. However, it’s worth noting that this can impact the effectiveness of your campaigns when looking at your return on ad spend or the average order value.
Plus, many luxury brands prefer not to offer discounts, as it can lower the perceived brand or product value. So how can we get creative with promotions to attract customers without cheapening the brand?
We have explored similar strategies during the Black Friday and holiday promotional periods. One particular method that luxury brands could adopt would be referral campaigns. Not only does it reward customers for shopping with you but it also utilizes network effects, with customers bringing in even more customers.
By incentivizing referrals with money off purchases, the chance to win products, free gifts, and more, you’ll be giving your customers more value without impacting brand value.
4. SPENDING HABITS
Although consumer spending habits will largely change during a recession to prioritize essentials, 17% of consumers said that the potential of a recession hasn’t changed their spending habits, with a further 13% saying that it might.
The lesson here is that even during a recession, consumers will spend. The key is in knowing how to communicate to and reach these consumers.
One way is to run campaigns that communicate the benefits and feelings brought about by your luxury products or experiences. If a purchase still feels important to a customer, then it will remain to be one of their priorities.
Another approach is to build aspirational campaigns that have a ‘fear of missing out’ effect, creating an irrefutable desire for their products. FOMO is particularly effective in getting engaged customers over the line to make a conversion. As we all know, exclusivity is a major tactic in luxury, where 47% of shoppers will pay full price to be the first or only person to own a particular product.
5. COMPETITION
It’s not only consumers who tighten their purse strings during a recession, it’s businesses too. Historically, brands would spend less on their social media marketing. But over the last few years, brands have realized the rewards that can come from doubling down on marketing efforts during these times.
Viral campaigns that think outside of the box can work exceptionally well. Take the Olaplex dupe campaign which saw the haircare brand create its own ‘Oladupé’ to mock brands creating dupes of its products. The humor in the campaign helped take it to viral status while reinforcing the value of its authentic and original product.
Ready to thrive during tougher economic times? Contact Block & Tam to build effective recession-proof social media campaigns.
