The cost of cutting marketing in a recession

When business confidence dips, services is often one of the first things to go. The logic feels sound enough: if revenue is under pressure, you should reduce outgoings. But what if that decision makes the pressure worse?

Rather than rely on theory or anecdote, we pulled data directly from HubSpot-managed accounts to see how businesses that maintained their marketing investment performed against those that paused or stopped it during one of the more challenging periods of the year.

TLDR: Businesses that stopped their marketing services during the downturn saw decreases of between 28.90% and 62.10%. Businesses that continued marketing efforts only saw decreases of between 7.54% and 9.8%.

Cutting marketing in a downturn: Time period

The data covers 1st December 2025 to 28th February 2026, compared against the three months prior (1st September to 30th November 2025). This is worth noting because that window is already difficult for most New Zealand businesses: December and January are short months, the summer break disrupts normal activity, and business confidence was under strain. ANZ's Business Outlook tracked confidence sitting between 50% and 67% through September and November, peaking briefly at 74% in December before falling to 59%.

A dip in performance across the board was expected. The question was whether businesses that stopped investing in marketing experienced a bigger dip than those that kept going.

Reducing marketing spend: What the numbers show

We sampled two groups: four businesses that either paused their marketing or stopped working with us at the start of December, and seven businesses that continued working with us throughout the same period. The results across three metrics tell a clear story.

Traffic to the website

Both groups saw website traffic decline, which is expected given the conditions. But the scale of the difference is striking. Businesses that maintained their marketing saw traffic drop by 9.6%, while the ones that paused saw a drop of 30.8%. That's more than three times the decline.

Leads from online sources

The lead data follows the same pattern. Agency-managed businesses that continued their marketing efforts saw a 7.54% decline in leads acquired. Businesses that stopped or paused saw a 28.90% decline – nearly four times the fall.

Deals Created from marketing

This is where the gap becomes almost difficult to believe. Businesses that continued with their marketing saw deals created drop by 9.52%. This aligns with the drops further up the funnel with a similar drop seen in traffic, and leads. Those that paused saw a decline of 62.10%, more than six times the impact.

The reporting period includes December and January, which are naturally slower months for sales activity in the construction, and agricultural sectors. But that factor applies equally to both groups, which makes the difference even more telling.

Why Does This Happen?

The reason comes down to visibility and momentum.

During a downturn the number of buyers in a business’s target market contract. The scale of the downturn dictates the scale of the contraction. The size of the market during positive market conditions can sustain many competitors, with each requiring little effort to attract and convert these opportunities.

As conditions become more competitive the market size reduces. With fewer buyers competitors need to hunt more aggressively for the reduced opportunities. Many providers cease to operate, which naturally trims the list of available providers, increasing the share for those that remain.

This period of market adjustment is where it’s decided which providers cease, and who remains. Businesses that stop or reduce their marketing efforts reduce their visibility, which enables an alternative provider to win an increased share of the remaining opportunities.

The long-term effect of reduced marketing.

Businesses that keep marketing through a downturn protect their visibility during the low period, which puts them in a much stronger position when conditions improve. They haven't had to climb back from a standing start.

When the market picks up, and buyers begin to flow into the research phase, prospects either have awareness of the providers that continue to market to them, or quickly find those that keep activity running. Those that stopped marketing are either relying on their organic presence from previous activities, or on injecting significant budget into advertising to raise awareness quickly. This is often more expensive than the savings gained during the ‘off’ periods as these businesses are entering a market where others have remained competitive.

Anecdotes vs Evidence

There's plenty of discussion in marketing circles about the value of maintaining spend during difficult periods. Large historical brands are often cited as examples of businesses that grew market share by advertising while competitors pulled back. But those examples don't always translate to smaller operators in the New Zealand and Australian markets.

What makes this data meaningful is that it's local, it's recent, and it's drawn from real businesses operating in real conditions. Both groups were dealing with the same economic environment, the same holiday disruptions, and the same general uncertainty. The variable was whether they kept their marketing investment in place or not.

What This Means for Your Business

Cutting marketing to reduce costs in the short term is understandable. Cash flow matters, and budgets get squeezed. But the data suggests the cost of stopping is significantly higher than most businesses realise. Traffic drops at three times the rate. Leads fall at nearly four times the rate. And the pipeline impact, reflected in deals created, can be severe by comparison.

Aside from just generating leads, consistent marketing also sustains the trust and visibility that keep a business in the conversation while things are difficult. During tough times customers need higher levels of assurance that their investment is going in the right place. They want a business that has fiduciary prudence, one that can remain viable even when the market tightens. This can come from keeping normal operations running, to showcase this stability.

When conditions improve, those businesses aren't starting from scratch.

If you'd like to talk through what a consistent, results-focused marketing strategy looks like for your business, we're happy to have that conversation.