Marketing Budget Mistakes Finance Leaders Can’t Afford in a Downturn

There's nothing positive to say about an economic downturn, right? 

As organizations enter 2026, they're entering an environment with more cautious buyers, longer sales cycles, and increasing pressure to justify every dollar spent.

When uncertainty rises, one of the first areas many companies instinctively look to reduce is marketing. 

But in some cases, your first instincts on how to do that may not be the right ones. 

Since marketing contributes heavily to your business growth, the wrong cuts can leave your business hurting--unable to bounce back quickly once the recession ends. 

So how can you deploy your marketing budget strategically to get the most return from your recession spending?

The History of Recession-Era Marketing

The first thing you need to know: continuing to invest in marketing and promotion during a recession can have positive effects on your business. And you don't have to take our word for it--just take a look back at history.

During the Depression of 1920 to 1921, researchers Roland Vaile and Reavis Cox found that companies that increased their ad budgets drove more sales than their competitors--both during the crisis and after.

And during the 1981 to 1982 recession, the McGraw-Hill Research Laboratory of Advertising Performance found that B2B businesses that kept investing in marketing had "significantly higher sales growth" both during the recession and for three years after.

And in a lot of ways, that makes sense. After all, spending doesn't stop entirely during a recession--and your potential customers need a way to know you're still thriving if they do have dollars to spend. And when a recession is over, the market often responds with a period of growth. To bounce back quickly and to take advantage, you want to be ready when it comes. If you've clearcutted your marketing budget, you won't be.

So what should you be doing (and not be doing) as a recession looms? How can you make the necessary cuts while ensuring you have the marketing resources to maintain a growth position?

5 Do's and Don'ts to Drive Your Marketing Budget

Funds are tight during a recession, so deploy your marketing budget strategically. And that means understanding your audience, the market and your place in it. Here are a few do's and don'ts to get you started:

1. Do Understand Your Competition And Their Response to Market Shifts

Understanding your competitors means going far beyond knowing who they are by tracking how they behave when market conditions tighten.

Are they slowing down advertising, reducing marketing headcount or pulling back on brand-building efforts? Are they cutting back on channels where they've historically dominated?

Is their share of voice, or share of search slipping?

If competitors are retreating, you may be able to:

• Increase visibility while their presence declines

• Capture market share at a lower relative cost

• Recruit high-performing talent released from other teams

• Strengthen brand credibility while theirs weakens

Companies that lean in while others pull back often emerge far stronger in the recovery. While competitors scramble to rebuild awareness later, you’ll already be top of mind.

2. Do Re-Evaluate Your Customers’ Needs in Real Time

Customers don’t behave uniformly during economic slowdowns.

Their priorities, budgets and buying triggers shift, sometimes quickly.

Look for changes in:

• Buying cycles (Are decisions taking longer?)

• Value drivers (Are customers prioritizing efficiency? Risk reduction? Cost control?)

• Channel engagement (Which touchpoints still perform? Which fall off?)

• Shifts in segments (Some segments may stay resilient while others contract)

A clear, current view of customer behaviour helps you:

• Allocate spend to the channels that still deliver

• Pivot messaging to match emerging pain points

• Preserve pipeline quality even when budgets tighten

• Identify new pockets of demand or underserved segments

The companies that stay closest to their customers and not their assumptions will spend smarter and grow faster, even in uncertain conditions.

3. Do Continue Investing in Brand Awareness

When budgets tighten, brand awareness may seem like the easiest line item to trim. But in volatile markets, visibility becomes even more important.

Your customers may be spending more cautiously, but they haven’t stopped researching, evaluating or shortlisting vendors.

Maintaining brand presence ensures that:

• You remain top of mind when buying decisions restart

• Your pipeline doesn’t dry up due to lack of demand creation

• You preserve trust and credibility while weaker competitors go silent

Periods of reduced noise create rare opportunities: fewer brands advertising means your share of voice increases at a lower cost, improving long-term brand equity and accelerating recovery when conditions improve.

In uncertain markets, customers gravitate toward organizations that project confidence.

4. Don’t Be Afraid to Launch a New Product. Just Make Sure It Solves an Immediate Need

Economic slowdowns can actually be ideal moments to introduce a new product or service, especially one that helps customers reduce costs, improve efficiency or solve high-priority problems.

History backs this up: innovative products like Scotch Tape and Miracle Whip were launched in difficult economic climates because they offered meaningful value at the right moment.

The lesson for 2026?

If your offering directly addresses a pain point intensified by market conditions, launching now can give you a competitive edge.

To do this effectively:

• Validate the problem quickly with real customer feedback

• Position the product as essential, not optional

• Invest in targeted marketing to reach high-intent segments

• Highlight practical value such as efficiency, savings, risk reduction

The companies that continue solving problems are the ones customers remember.

5. Don’t Fall Into a Technology Rut

When uncertainty rises, the instinct is to freeze spending, especially on technology. But clinging to an outdated or underperforming tech stack can cost far more in lost efficiency, poor attribution and slower performance.

Modern marketing relies heavily on tools that:

• Provide clear ROI visibility (a CFO priority)

• Improve campaign efficiency and automation

• Strengthen first-party data strategy

• Help teams do more with less

Investing in the right technology during a downturn is about upgrading strategically to increase productivity per marketer and optimize every dollar spent.

Smart tech investments allow you to:

• Identify the channels that truly drive revenue

• Automate low-value work and preserve headcount

• Improve measurement, forecasting and budget allocation

• Scale demand generation even when resources are limited

The right tools often pay for themselves faster when budgets are under pressure.

Marketing in a Economic Downturn: Looking Past the Short Term

Economic downturns and all that comes with it can be a stress on all types of business, if you want to come out ahead you can't be short-sighted.

Staying aware of current market changes is imperative, but so is keeping an eye on the future and not letting go of your growth goals. By remaining proactive and agile, you'll be ready not just for anything the market crisis throws at you, but you'll be prepared for when the recession ends as well.

But for that to happen, you can't neglect your marketing budget. 

Instead, you need to look for new growth opportunities and continue investing in marketing in response. You'll be in a better position if you do.