It would seem like the UK’s economic downturn is gathering pace. For the first time since March 2021, private sector activity fell in the three months to August, according to the CBI Growth Indicator.
The economic contraction was largely driven by the reduction of manufacturing output and consumer services, which saw activity fall at a much sharper rate than expected. Private sector activity fell from +8% to -5%. Manufacturing output fell to -7% from +6%. Business and professional services fell to -1% from +19%. Consumer activity dropped from -4% to -37%. However, it wasn’t all doom and gloom. Growth was reported in distribution sales, which rose from +3 to +7. *
In the next three months, economic activity is expected to fall at a faster pace (-12%). Consumer services is forecast to be the largest hit sector, expected to contract by 29% whilst business and professional services will fall into the red, reducing by 16%. *
A Gloomy Economic Outlook
The Bank of England is forecasting that the UK will enter a recession in Q4 2022. Any economic contraction is expected to last five quarters before entering stagnant to weak growth in the medium term to 2025.
Publishing a new Monetary Policy report, the Bank of England has revised its inflation forecast. In June 2022 Consumer Price Inflation (CPI) hit 9.4%, driven primarily by price rises in energy, food and physical goods. A year ago, in September 2021, CPI stood at 3.1%. *
However, the Bank of England is now forecasting that inflation will continue to rise until the end of the year, with the CPI peaking at 13.3% in Q4 2022. This is a significant rise compared to the Bank’s previous expectation that the CPI would hit 10% in Q4 2022. *
The outlook may look gloomy, but there is light at the end of the tunnel. The Bank of England expects inflation to tail off back to its 2% target by 2024. Of course, continuing concerns over access to key commodities or the expected disruption to European gas supplies may yet further disrupt inflation rates.
Tough Months Ahead as the Cost-of-Living Crisis Bites
New Prime Minister Liz Truss has confirmed household bills will be capped at no higher than £2,500 from October 1st, for the next two years under the new Energy Price Guarantee. Additionally, the £400 discount on energy bills setup for this winter means that a typical energy bill should cost no more than £2,100 a-year.
This help is most welcome, especially when the cost-of-living crisis will shortly (if not already) begin to hit people, especially families’, wallets. According to the latest ONS report, the biggest contributor to the alarmingly high CPI is the cost of food. We’re already seeing people turn to borrowing to make ends meet. According to the Bank of England’s July Money and Credit Report, UK borrowing is growing at an annual rate of 4.5% – the highest rate since March 2020.
Why is the cost-of-living crisis intertwined private sector activity? Simple. When consumers are forced to rein in their own spending, businesses themselves face the dual challenge of rising operational costs and reduced demand for products and services.
A suite of measures is needed to shore up business confidence and encourage fresh investment. Making sure that businesses have the right infrastructure to succeed in a challenging market is paramount. Measures include reforming business rates, offering a more flexible apprenticeship levy and coming up with a permanent successor to the super deduction are just a handful of ways for sustainable economic growth despite challenging circumstances can be achieved.
Why Not Investing in Digital Marketing is a BAD Idea
Now, you’d be forgiven for thinking that this all doom and gloom. However, irrespective of the economic outlook, the common mistake enterprises make when the economy appears to contract is hitting the pause button on their marketing activities.
Looking at it a different way, you could argue an economic downturn represents the perfect opportunity for enterprises to scale marketing activities, after all Google’s algorithms don’t care about how prosperous the economy is!
It’s also wise to remember that just as you may believe it’s prudent to reduce marketing spend but your competitors may have the opposite opinion. This could leave you trailing in their wake, making it even more difficult to steer the ship through the choppy waters of an impending – and actual recession.
The bottom line? Long-term thinking is still very much at the forefront sound practice. So, what should businesses do? We’ve put together a lowdown of essential activities below.
Don’t Hit the Pause Button on Your SEO Strategy
SEO is a long-term strategy. This doesn’t change regardless of how the economy is performing. Pause or even scale back on your SEO activity during in an economic downturn and you’ll significantly compromise organic traffic revenue.
Google makes up to 12 small changes to its algorithm every day. * All designed to improve user experience. Google uses more than 200 ranking factors to optimise performance, but your average user will never notice what’s different – they’re all made behind the scenes! Yet, each change is designed to improve user performance. Without an effective SEO strategy, your enterprise won’t benefit from incremental performance improvements.
In a subdued economic climate, generating as much traffic to your website is paramount. Provided that your content is strong, the customer journey clear and your products and services needed or wanted, pages should convert visitors into customers.
An effective SEO strategy is one that establishes a growth roadmap. Experienced agencies will review and implement keyword research, user intent analysis, competitor gap analysis, technical and content audits and backlink analysis. This may sound like a lot but get it right and you’ll have a solid foundation to build a competitive market share, even during economic downtimes.
Leverage PPC to Bolster Market Share
PPC can bolster any digital marketing strategy. Not only can PPC help businesses to segment their audiences allowing them to reach a niche or broader audience, but they can filter campaigns in myriad ways.
From geographic locations to specific product listings, even devices, PPC’s powerful targeting capabilities can help businesses to promote their best-selling/most desirable products to customers with a strong intent to buy.
As with any marketing activity, enterprises will want to achieve an ROI that makes all the effort – and expense – worth it. With PPC, enterprises only pay a fee when prospects click on a link. Enterprises can control their spend and cultivate a ‘buyers’ market’, increasing keyword competition.
Best of all, enterprises can run several PPC campaigns targeting a range of keywords simultaneously. This means that they can broaden their influence whilst achieving both a short-term spike in website traffic and long-term growth.
Inspire Prospects and Customers with the Quality of Your Content
In times of economic uncertainty, the psychology of your audience is likely to change. They might be more anxious than normal, less inclined to take a financial risk, want reassurance and more answers to questions they’re faced with.
This is an opportunity for your content to shine. To plug information holes with content that builds trust and credibility by educating and inspiring audiences. This can be achieved with an informative series of blogs. Strong, action-oriented page copy. Social media platforms that demonstrate that you have your fingers on the pulse of what’s happening in your industry.
The takeaway? Focus on building your subscriber base, your brand awareness with quality content instead of the cold hard sell and you’ll cultivate a strong brand reputation – one that’s valued by prospects and customers.
When all’s said and done, content marketing is an opportunity for you to communicate your brand’s response to the economic situation, establish meaningful relationships with your customers, achieve a short and long-term SEO gain and build a strong subscriber base to nurture in the long-term.
Deploy Sound Social Media Practices to Understand and Address Prospect and Customer Pain Points
Up your social media game and you’ll reap rewards, especially in times of economic uncertainty. Why? Let’s be honest, most of us are addicted to social media. We relentlessly browse Facebook, Twitter, hypnotise ourselves watching YouTube videos, switch off when scrolling TikTok and check out what our favourite Instagram influencers, friends and family are up to morning, noon and night.
Social Media Marketing (SMM) gives enterprises the opportunity to connect with their audiences in a meaningful, purposeful, and intimate way. Share content you wouldn’t or simply couldn’t on your website. Build impactful relationships that affect audiences’ perceptions. This is essential in an especially competitive or subdued market.
Better still, your social media can be an effective way to instil and cement prospect or customer confidence. Platforms can support enterprise PR initiatives, delivering content 24/7, at a time when audiences need and want it.
Pay attention to what’s happening in your sector. You’ll be able to create and share posts that assuage audience concern, position yourself as an enterprise of authority, align products and services to what the market wants and promote your brand. Social media gives enterprises the power to shape and shift opinions, fill information gaps, and shift consumer behaviour.
Let’s say, for instance, that you own a property sector enterprise. There are concerns about how the economic climate will affect house values and sales. Is investing in property still a good idea? Does it offer a worthwhile yield? What about rental costs? Well, pivot your social media content around addressing the key pain points a sector is experiencing and you’ll be able to promote value to prospects and customers. You can influencer audiences in a positive way.
Invest in Web Analytics
We know. Web analytics is hardly scintillating stuff. But that doesn’t mean that enterprises should ignore its value, especially when they need to be considering how to optimise all digital marketing strategies.
Web analytics is vital to understanding consumer behaviour. Say you want to know how long your customers spend browsing a specific page on your site or if your customers click through different pages to learn what you’re all about. How do you do this? Web analytics.
These are both very basic web analytics functions. The truth is that for any digital marketing strategy to be successful, enterprises need to use data to optimise their activities. Data insights inform decisions, influence strategies, even help businesses to pivot their product or service offerings.
Monitoring performance, including site visitor interaction is crucial to helping enterprises make better decisions in times of economic volatility. User behaviours may change, but as long as your enterprise is aware of, prepared for and ready to act to combat the downturn, you stand a good chance of emerging from a challenging economic climate stronger than before.
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Interested in discovering how Jungle Marketing can help your business to prosper in times of economic uncertainty? Get in touch with us today.
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