Reading the media nowadays, every day we hear more stories about companies slashing marketing budgets, putting projects on hold and laying off people.
However, there is a very sound business case to be made for keeping (or even increasing) marketing/PR spending during an economic downturn, and here are three reasons why:
In business school, I remember a lecture a professor gave that was at the time counterintuitive, but now makes perfect sense. He said that when times get tough, companies should not be making perfunctory cuts across the board of 10% to please investors or to improve their bottom line (net income). While companies may be focusing on their bottom line by cutting marketing budgets, they are not paying attention to the top line (revenues). And many of their smart competitors will take advantage of this situation by not cutting, and thereby gaining share of voice and increased revenue.
Paid advertising (i.e. media space) is very expensive, and especially in times of economic uncertainty, there is a more cost-effective way to reach your target audience - public relations. Public relations doesn't use paid advertising space so it is much less expensive and can also carry much more credibility among target audiences precisely because it isn't paid.
In a recession, customers will hold back on spending until they feel things are turning around. This will shrink the market - but the only winners during this time will be those companies that either happen to sell a product that does well in an economic downturn (e.g. alcohol, lipstick), those who make a unique product that people really want or need (e.g. the iPhone, Lipitor), or, in most cases, those companies that build loyalty with customers by building relationships with them and by providing value. Relationship-building is an integral part of public relations and without it, your customers will forget why they love you. And that will directly impact sales.