Whether we like it or not, the UK and probably the western world are on the cusp of another recession. Having only just recovered from the last recession in 2008, we were hit with a climate crisis, a pandemic, and war, to really shake up the economy. While Millennials wait for the housing market to collapse in order to afford a home, what is affiliate marketing doing?
Well, it turns out a lot to take note of. Take a look at our predictions for what will happen to affiliate marketing, taking the mentioned worldwide horrors of the recent past as an example.
There are four major behavioural changes that occur when a population is facing, or in the midst of, a recession. They are that they firstly, are spending more online. This was seen in lockdown but wasn’t entirely caused by it. We perceive that when we go out we will spend more, so it’s better to stay indoors and buy “one thing”. Even practically that makes sense. Going to a shopping centre takes petrol, parking money, and maybe a meal to make it feel worth it.
This is obviously good news for affiliate marketing, which in fact, might see a boost from a recession.
Consumers will spend to enhance their at-home experience. Spending doesn’t stop or slow, but it does change. Spending more on groceries than in restaurants means buying better food from the grocery store, loading up on treats, spices, and other things that would make for a special meal. At-home entertainment will see a boost as people opt out of gigs and cinemas for Netflix and Hulu. People will use the time at home practically, treating themselves to something to keep them amused while they’re at home, like a new instrument, language lessons, or gaming consoles.
Speaking of homelife, the most popular items getting sold will be the ones that will maximize home life. Clothing for the sake of style might go down again like we saw during lockdowns that still has everyone wearing cycle shorts and sports bras rather than “jeans and a nice top”. Entertainment systems will be kitted out. Kitchenware will go up. Anything that makes staying at home feel like an occasion.
However, amongst this change in spending marketers need to remember two things: bargain hunting will be name of the game, and brand loyalty will be more important than ever.
You can see by trends of upcycling, making your own clothes, and other fun TikTok genres, that people love bargain hunting. Being thrifty is the new designer: no one else has it and you have enough money left over to buy lunch. Users are going to be looking out for any sale, any one-off, anything that makes their buy worth it.
The other side of that is that users are less likely to take a chance on a new brand. They will stick to what they know and hope that their chosen brands treat them well. The goal will more so be to keep your existing users happy with engagement and offers to ensure they don’t stray away.
Ecosystems within B2B affiliate partnerships
However, that is the consumer side of things. How are B2B relationships likely to be affected by a recession? After all, B2B represents 70% of the economy, so any changes in the ecosystem are likely to have lasting effects throughout the industry.
And like everyone else in a recession, B2B will end up being frugal with what they have. Margins will decrease due to inflation and rising wages to match inflation. This is where B2B companies tend to make a strategic mistake: they reduce their marketing.
Marketing budgets go towards profit margins instead, shooting the company in the foot. You can limp along with more change in your pocket for now, but when things improve no one will know who you are or what you offer. In the meantime, the market is open for anyone else who isn’t falling into this trap.
By continuing with affiliate marketing in particular, you can use a very affordable means of marketing to reach the people you need to. You can develop credibility, reliability, and intimacy between businesses that will see loyalty grow, and it will be there waiting for you when the recession is over. The recession is the time to build relationships, not let them rot.
If you’re interested in more insights about affiliate marketing, check out our blog. Or for a more personalised approach, book a free call with a member of our team.
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