Shrinking Wallets, Shrinking Budgets. Now What?

The real problem isn’t your marketing budget. It’s what you’re doing with it.

The economy is weird right now—inflation is still biting, tariffs are piling on, and consumer sentiment is hovering around rock bottom. Business leaders feel it, customers feel it, and everyone is looking for something to cut. Marketing usually ends up first in line.

That reflex isn’t harmless, and it definitely isn’t strategic.

The Middle Class Isn’t What It Used to Be

Here’s the backdrop you’re selling into:

• The Consumer Sentiment Index dropped to 50.3 in November 2025, a 3.5-year low

• Real disposable personal income growth slowed to just 1.9 percent

• About one in four U.S. households are living paycheck to paycheck

• Forty percent of middle-income earners have taken on side jobs to stay afloat

The middle class is under pressure, wallets are thinner, decisions are slower, and the days of blind brand loyalty are long gone.

Cutting Marketing Won’t Save You

We’ve been here before.

• During the 2007 to 2009 crisis, a study of 1,100 U.S. retailers showed the top-performing brands increased marketing and operating spend by 2.2 percentage points and saw a 21 percent return. The ones who cut lost ground (Event Vesta).

• Another study found that brands going dark on advertising lost around 15 percent of their business over time (Analytic Partners).

• Cutting marketing when your customers are already hesitant is like turning off the lights when the power’s flickering. You’re not saving anything, you’re just speeding up the blackout.

How to Stretch Your Budget Without Slashing It

This isn’t about spending more. It’s about spending smarter. Here are five ways to get more out of the budget you have:

1. Audit your creative

Bad creative doesn’t just underperform—it eats your budget. Research shows more than 40 percent of digital ad spend is wasted because of poor creative, weak targeting, or irrelevant messaging. Test more, cut what’s not converting, and double down on what is.

2. Revisit your channel mix

More channels don’t mean better results. Stop trying to be everywhere and focus your spend on the few places where your audience actually pays attention. Cut the distractions and measure aggressively.

3. Don’t abandon what works

Every marketing team has at least one tactic that consistently delivers—paid search, email, direct response, etc. When budgets tighten, marketers often chase whatever shiny new platform is trending. But if your current strategy is already generating measurable ROI, stay focused.

4. Look at your sales process

Are the leads any good? Is your sales team closing them? Is the handoff between marketing and sales working efficiently? If your funnel is leaking in the middle, spending more at the top won’t fix it.

5. Monetize the audience you already have

Acquisition gets expensive fast. Selling to people who already trust you is cheaper. Build upsells, repackage offers, and segment smarter. If you haven’t squeezed more value out of your existing customers, you’re leaving money on the table.

Marketing Should Be a Revenue Engine, Not a Line Item

Your customers are still out there; they’re just harder to win, slower to convert, and more careful with how they spend.

You can cut your marketing budget, but be ready to give up market share while you’re at it. Or, do the smarter thing: tighten up your strategy, stretch what you already have, and keep showing up while your competitors go quiet.

Because some of them will. And that’s your opportunity.

FAQs

Should companies cut their marketing budgets during a downturn?

Not if they want to stay competitive. Brands that maintain or even increase marketing investment during economic slowdowns tend to gain market share while others pull back. Data from past recessions shows a clear performance gap favoring those who stay visible.

What’s the best way to stretch a marketing budget?

Focus on creative quality, audit your channel mix, and double down on tactics that are already delivering ROI. Look for internal inefficiencies—like weak sales handoffs or leaky funnels—and don’t overlook the revenue potential sitting in your current customer base.

Is creative really that important when budgets are tight?

Yes. Over 40 percent of ad budgets are wasted due to poor creative. In a constrained economy, you don’t have room for irrelevant or forgettable campaigns. Better creative makes every dollar work harder.