If a recession hits, which all signs these days are pointing to "yes", our beloved digital advertising industry won’t be immune—it’ll feel the squeeze, but not all sectors will take the hit equally. The industry won’t disappear; it’ll just get leaner, scrappier, and more performance-driven. I do love scrappy! Here’s what I would expect to happen based on the 20 years of ups and downs in the digital media industry and, more importantly, how advertisers and digital marketers can prepare:
Where Digital Advertising Will Take a Hit
💰 Ad Budgets Tighten – When companies start cutting costs, marketing is often first on the chopping block. Branding and experimental campaigns may be scaled back, while performance-based channels (like paid search) will likely hold steady.
How to Prepare: Double down on proving ROI. Every dollar spent should be tied to measurable results.
📉 CPMs and CPCs Drop – With fewer advertisers bidding for ad space, ad costs could decrease—a silver lining for those who stay in the game but a challenge for publishers reliant on ad revenue.
How to Prepare: If you have the budget, this could be a golden opportunity to grab more market share at a lower cost.
🛍️ Consumer Spending Slows – Even the most brilliant ad creative won’t save conversions if people are hesitant to spend. Sectors like travel, luxury, and entertainment will likely feel it first.
How to Prepare: Focus on essential messaging—why your product or service is a must-have, not a nice-to-have.
🎯 Performance Marketing Takes Center Stage – With every penny scrutinized, brands will shift toward channels that guarantee measurable ROI, like paid search, retargeting, and influencer partnerships, while broad awareness campaigns may take a backseat.
How to Prepare: Optimize campaigns for efficiency. A/B test relentlessly, refine audience targeting, and make sure your ad spend is driving real business outcomes.
🛒 Retail & E-commerce Could Struggle – If consumers pull back on spending, digital retailers and DTC brands will see lower ROAS, forcing tough decisions on ad budgets.
How to Prepare: Leverage first-party data and loyalty programs to maximize customer retention. Re-engaging existing customers will be more cost-effective than acquiring new ones.
Where Digital Advertising Will Still Win
🚀 Cost-Effective Channels Will Shine – Email marketing, SEO, and organic social become MVPs when paid ads get too pricey.
How to Prepare: Strengthen these owned channels now. A robust email list and strong organic presence can be lifesavers when budgets shrink.
🏥 Essential Industries Stay Strong – Healthcare, finance, insurance, and essential consumer goods will still invest in digital ads, but they’ll likely demand more efficiency and accountability.
How to Prepare: If you’re in these sectors, be ready to show hard data on ROI. If you’re not, consider how your brand can position itself as an essential solution.
🎯 Bargains for Smart Advertisers – When others pull back, those with cash on hand can take advantage of lower ad costs and reduced competition.
How to Prepare: If you can, maintain or even increase ad spend strategically to gain market share while competitors retreat.
What are the Biggest Wild Cards?
🔍 Tech Giants’ Ad Revenue Shakeups – Google, Meta, and Amazon will still dominate, but their ad models could shift based on industry-wide budget cuts.
How to Prepare: Stay agile. Diversify ad spend across platforms instead of relying too heavily on one channel.
🤖 AI & Automation Take Over – With tighter budgets, expect more reliance on AI-driven ad optimization to maximize efficiency.
How to Prepare: Lean into automation. Use AI tools for bidding, targeting, and creative optimization to make your dollars stretch further.
⚖️ Regulatory Changes Keep Coming – Privacy laws and cookie deprecation will keep shaking up ad targeting.
How to Prepare: Get serious about first-party data and invest in contextual advertising to future-proof your targeting strategies.
Final Word: Pivot Smart, Don’t Panic!
Recession or not, digital advertising isn’t going anywhere—it’s just evolving. The brands that stay adaptable, prioritize efficiency, and invest in the right places will come out ahead.
It’s not about spending more; it’s about spending smarter. 🚀
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