Marketing Spend During a Recession: The Shocking Truth Backed By 1,000+ Real Company Results

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Economic downturns often tempt companies to slash “non-essential” costs like marketing and advertising. History and research, however, suggest this can be a costly mistake.

Multiple studies spanning decades have found that firms maintaining or increasing marketing spend during recessions tend to recover faster and even outperform competitors, whereas those that cut back often struggle to regain footing.

For instance, a McGraw-Hill analysis of 600 companies during the early 1980s recession found firms that kept or raised ad spend saw 275% sales growth over the next five years, compared to only 19% growth for those that cut advertising.

Advertising legend David Ogilvy likewise noted that across six historical recessions, companies that did not cut their ad budgets achieved greater profit increases than those that did.

In short, as the old adage goes:

“When times are good you should advertise. When times are bad, you must advertise.”

This report conducts an in-depth review of academic studies and company case studies on marketing budget decisions in times of economic uncertainty, focusing on the retail and hospitality sectors from 2000 to the present.

We examine what happens when companies maintain versus cut marketing/advertising during downturns including the 2007–09 Great Recession, the 2020 COVID-19 pandemic, and other slowdowns.

The evidence (peer-reviewed research, real-world examples, statistics, and expert commentary) clearly shows that continued marketing investment in a crisis pays off in both the short and long term, whereas pullbacks can harm performance.

Marketing Spend During a Recession: The Shocking Truth Backed By 1,000+ Real Company Results [Podcast]

Research Overview: Why Marketing in a Recession Matters

Peer-reviewed research shows that preserving marketing budgets in a downturn can yield gains in market share, brand awareness, and even short-term sales, positioning firms for stronger recovery once the economy improves. A 2011 Journal of Marketing study by Srinivasan et al. found that many firms actually underspend on advertising during recessions, to their detriment. The stock market tended to reward companies, especially B2C service firms, that increased advertising during recessions, reflecting investor expectations that these firms would capture future growth.

Another study of U.S. recessions concluded that firms who maintained advertising experienced higher profits during the recession and sustained those gains post-recession, whereas fewer than 30% of the firms that cut marketing were able to regain their pre-recession positions afterward. A global survey by Kantar in early 2020 also found only 8% of consumers thought stopping advertising was a good idea during the COVID crisis – most expected brands to adapt messaging but stay visible.

The Great Recession (2007–2009): Retail Sector Impacts

A McKinsey study of 1,100 companies during 2007–09 found that the top fifth “retail resilients” delivered +21% total return to shareholders (TRS), while the rest averaged –4% TRS. The resilient retailers increased their marketing and operating expenses by 2.2 percentage points during the recession, whereas less resilient peers cut back.

T.J. Maxx (TJX Companies) boosted ad spend by 15% and shifted messaging to attract new bargain-seeking consumers. In 2009, 75% of TJ Maxx shoppers were new customers. Domino’s Pizza launched new products and kept ad spending up, delivering +16% TRS from 2007–2011, outperforming a major pizza competitor that cut back and saw –7% TRS.

Amazon.com introduced the Kindle and ran aggressive campaigns, growing sales by 28% in 2009 despite the recession. Match.com used heavy marketing to position itself as affordable entertainment and gained 25% revenue and 30% more subscribers.

The Great Recession: Hospitality Sector Impacts

A study published in Cornell Hospitality Quarterly concluded that hotel firms that invested in marketing during the 2008 downturn saw better immediate revenue outcomes and longer-run gains. The highest-performing hotel groups increased advertising and marketing, while others cut costs across the board and saw steeper revenue declines.

The study found:

• Pricing Strategy: Winners avoided deep discounts; losers heavily discounted.
• Cost Cuts: Winners increased marketing spend; losers slashed marketing budgets.
• Revenue Drivers: For winners, marketing drove revenue even during demand drops.

Historical support includes McDonald’s cutting ads in the 1990–91 recession, while Pizza Hut and Taco Bell increased theirs. Result: Pizza Hut sales +61%, Taco Bell +40%, McDonald’s –28%.

COVID-19 Pandemic (2020): Retail Sector Impacts

Procter & Gamble (P&G) maintained and increased marketing spend during COVID, leading to surging revenues in 2020. P&G executives stated their goal was to emerge stronger, and they did. In contrast, Coca-Cola cut ad investment by 35%, pulling $2 billion from its communications budget. Outcome: Coke revenues dropped 11%, while Pepsi (which kept ads running) grew revenues by 5%.

Many digitally native brands (e.g., Peloton, online fitness, and food delivery) increased advertising during COVID and grew fast. In the UK, e-commerce brands grew TV ad spend by 37% from 2019–21.

COVID-19 Pandemic: Hospitality & Travel Sector Impacts

A Skift Research survey found nearly 90% of travel marketers slashed marketing budgets in 2020. However, some brands stayed engaged through virtual campaigns, safety messages, or loyalty engagement. Those that maintained brand visibility were better positioned when demand returned.

Kantar’s consumer study showed most customers wanted brands to keep communicating, just with adjusted tones. Those that disappeared had to rebuild brand recognition from scratch when the market rebounded.

Takeaway

From Kellogg’s in the 1930s to T.J. Maxx, Domino’s, Amazon, and P&G in modern downturns, the story is the same: companies that continue to market during recessions fare better in brand awareness, customer loyalty, revenue, and shareholder returns.

Cutting marketing may seem prudent in the short term, but it can cost millions in long-term revenue and brand equity.

Outcomes Comparison: Maintaining vs. Cutting Marketing in Downturns

What to Do Instead of Cutting Marketing Budget

The evidence clearly shows that maintaining or increasing marketing spend during economic downturns yields better results than cutting back. But if your business is facing financial pressure, here are strategic alternatives to consider instead of slashing your marketing budget:

Adjust Your Messaging Strategy

Rather than cutting your marketing presence entirely, consider pivoting your messaging to better align with the economic climate:

• Target bargain-seeking consumers: Take a page from T.J. Maxx’s playbook during the 2008 recession, when they shifted their positioning to attract value-conscious shoppers. This strategic pivot resulted in 75% new customers.
• Emphasize value and affordability: Focus on how your products or services provide essential value during challenging times. This doesn’t mean deep discounting (which the Cornell hospitality study showed was ineffective), but rather highlighting the core benefits that make your offering worth the investment.
• Maintain visibility with modified tone: As the Kantar survey revealed, only 8% of consumers thought stopping advertising was a good idea during the COVID crisis. Most expected brands to adapt their messaging while staying visible.

Reallocate Marketing Resources

Instead of reducing your overall marketing budget, consider strategic reallocation:

• Shift to higher-ROI channels: Analyze which marketing channels are delivering the best returns and concentrate resources there. During downturns, digital channels often provide better targeting and measurement capabilities.
• Focus on customer retention: It’s typically more cost-effective to retain existing customers than acquire new ones. Consider shifting some budget toward loyalty programs and customer service initiatives.
• Explore co-marketing opportunities: Partner with complementary businesses to share marketing costs while expanding your reach to new audiences.

Leverage Financial Strategies to Preserve Marketing

As mentioned in the podcast transcript, there are financial approaches that can help maintain marketing investment:

• Utilize financing options: Consider lines of credit or other financing to maintain critical marketing activities during temporary downturns, especially if you have data showing the long-term return on marketing investment.
• Find operational efficiencies: Look for cost savings in other areas of the business that don’t impact customer acquisition or retention. This could include renegotiating vendor contracts, optimizing inventory, or improving operational processes.

Innovate Your Product or Service

Following Domino’s example during the 2008 recession, when they launched new products while maintaining marketing spend (achieving +16% total return to shareholders):

• Develop offerings for price-sensitive segments: Create new product tiers or service packages at different price points to appeal to customers with reduced spending power.
• Focus on solving recession-specific problems: Identify new customer pain points that emerge during economic downturns and develop solutions that address these specific needs.

Make Strategic Competitive Moves

With many competitors likely cutting their marketing spend, economic downturns present unique competitive opportunities:

• Gain market share from competitors who cut back: As noted in multiple studies, when competitors reduce their visibility, maintaining your presence can lead to significant market share gains that persist long after the recession ends.
• Explore underserved segments: Look for customer segments that competitors may have abandoned or neglected due to their reduced marketing efforts.

What next?

You can catch the full episode on our YouTube channel or your favorite podcast platform.

Check out some of our other podcasts and resources for event promoters below.

Key Sources:

• Srinivasan, R. et al. (2011). Journal of Marketing.
• Singh, A., & Dev, C. (2014). Cornell Hospitality Quarterly.
• McKinsey & Co. (2020). Resilient Retailers Report.
• Better Marketing (2020). How McDonald’s Handled the Early 1990s Recession.
• Kantar (2020). COVID-19 Barometer.
• Skift Research (2020). Travel Marketing Study.
• Marketing Week. (2021). P&G and Coca-Cola Analysis.
• CNBC (2020). PepsiCo quarterly revenue grows 5.3%.
• AnnualReports.com (2008). The TJX Companies, Inc. 2008 annual report.
• Domino’s Pizza (2008). Domino’s Pizza 2008 Annual Report.
• McGraw-Hill (1986). Ad Spend During Recession Study. (Unable to read or link original source, but this study is cited hundreds of times in other articles).
• Titan Growth. (2022). Recession Marketing Case Studies.
• Sydney Business Insights. (2020). Downturn Marketing Trends.
• Harvard Business Review
  • Quelch, J. A., & Jocz, K. E. (2009, April). How to Market in a Downturn. Harvard Business Review.
  • Gulati, R., Nohria, N., & Wohlgezogen, F. (2010, March). Roaring Out of Recession. Harvard Business Review.
  • Kumar, N., & Pauwels, K. (2020, August 14). Don’t Cut Your Marketing Budget in a Recession. Harvard Business Review.
  • Balis, J. (2022, November 11). Holding Onto Your Marketing Budget in a Downturn. Harvard Business Review.
  • Meer, D. (2009, April). Five Rules for Retailing in a Recession. Harvard Business Review.
  • Should You Launch Products During a Recession? (2023, September–October). Harvard Business Review.