Marketing During Economic Uncertainty

March 31, 2025 by Pat Cummings

As economic headwinds intensify with escalating tariffs, persistent inflation, and record household debt, executives face mounting pressure to contain costs while maintaining growth. Often in times such as these, marketing budgets can become prime targets for reduction. However, decades of history grounded in proven results has established this is a decision not to be taken lightly, as Ipsos MMA’s historical benchmark data, spanning 3 decades suggests. In fact, poorly planned and sub-optimized cuts can be shortsighted and potentially damaging in both the short and long-term.

The Current Economic Reality

Today’s business environment has a complex set of challenges. Companies are navigating trade conflicts, tariff implementations, stubborn interest rates, and consumers under financial pressure. This convergence creates a difficult balancing act: protecting margins against rising costs, maintaining pricing and promotion strategies with increasingly price-sensitive customers, and defending market share in a volatile competitive landscape, all while defending and building brands.

When financial pressures mount, the instinct to reduce spend is understandable. Typically, marketing is #2 or #3 in terms of corporate spend after headcount. But before making reductions to the marketing budget, it’s important to understand the strategic role marketing plays during economic uncertainty and the long-term consequences of short-term cuts on both sales and brand equity.

The True Cost of Reactive Cuts

Ipsos MMA’s benchmark database, provides a rich history of decades of economic cycles, revealing an important pattern: brands that make indiscriminate marketing cuts during economic downturns typically face recovery costs approximately twice the initial savings. This pattern emerges consistently across industries and economic conditions. Prolonged cuts had the potential to raise the cost of sales and damage brand equity, further exacerbating financial challenges.

About marketing during uncertainty:

First, brand and performance marketing are fundamentally interconnected. This is critical to understand. Our research shows that 20-35% of performance media effectiveness is actually driven by brand marketing investments. When organizations shift too heavily toward short-term performance channels at the expense of brand building, they risk diminishing returns as brand equity erodes.

Second, strong brands maintain greater pricing power during difficult economic periods. Companies that preserve brand investments remain less vulnerable to price sensitivity, while those cutting brand spending often find themselves increasingly reliant on discounting to maintain sales volume, to the detriment of their brands.

Third, and perhaps most importantly, approximately 30-40% of marketing investments fail to achieve their objectives in typical scenarios for several reasons. Some even produce minimal to no value. This inefficiency presents an opportunity to reduce spending without sacrificing effectiveness – if you know precisely where to cut.

Strategic Measurement: A Better Approach

Organizations that navigate economic uncertainty successfully take a fundamentally different approach to marketing decisions. Rather than making reactive, across-the-board cuts, they implement a measurement-based strategy that:

Connect marketing investments directly to business outcomes
Differentiate between effective and ineffective spending
Identify inefficient spending that can be allocated to both savings and reinvestment
Maintain critical brand-building activities while eliminating waste
Create flexible scenario plans for multiple economic outcomes

This approach requires sophisticated measurement capabilities that go beyond traditional marketing metrics to understand the complete commercial ecosystem. By quantifying the true business impact of marketing investments and their interaction with other business drivers, organizations can make precise, strategic decisions to save and grow rather than making uniformed, reactive cuts.

Emerging Stronger from Economic Turbulence

The most compelling insight from our research is that measurement-driven companies don’t just survive economic downturns, they often emerge significantly stronger than competitors. These organizations are able to identify opportunities amid market disruption, optimize their marketing investments for maximum impact, and position themselves for accelerated growth as conditions improve.

Can marketing budgets be reduced during economic uncertainty? Absolutely, but successful organizations focus on optimizing rather than simply cutting. They rebalance investments to eliminate ineffective spending while protecting the elements that drive both short-term performance and long-term brand strength.

Navigate Uncertainty with Confidence

As economic conditions continue to evolve, the ability to make precise, data-driven marketing decisions becomes increasingly valuable. Organizations that leverage unified measurement capabilities can transform economic uncertainty from a threat into a strategic opportunity.