As fears of a recession loom, marketing budgets—often the first to see cuts—are shrinking, particularly in the creator space, with companies like Pinterest, Patreon, and influencer marketing startup Grin being the latest to announce layoffs. Recent figures reveal that nearly half of U.S. brands cut spending in the wake of inflation, a global supply chain crisis, and overall economic volatility. According to the World Federation of Advertisers (WFA), nearly 30% of major advertisers plan to cut their ad budgets in 2023, with 74% reporting the economic downturn is influencing their 2023 budget.
This has many creators bracing for an uncertain 2023 as brands and advertisers look for areas to slash budgets, leaving them with less room in the budget for things like influencer marketing.
Emma Nacewicz (@emmanacewicz) is a full-time creator. She said she’s already starting to feel the effects of the economic slowdown, with fewer brands reaching out to her for brand deals, especially during the typically busy holiday season.
“Holiday time is a big money maker time for us, and I personally have had less brand deals—along with many of my friends who are also in this space,” she said. “I usually start gearing up and hearing about holiday campaigns around October, but this year, I didn’t start locking anything in until November and December, so I think brands are holding back and being conscious with their budgets.”
Influencing has been Addison Davis’ main source of income for about a year. A full-time college student at the University of Georgia, Davis (@addy_kate) depends on brand deals to help her pay her bills.
“It is not an ideal situation, especially because this is how I pay for most of the necessities in my life,” she said. “These budget cuts may affect my life as a creator just as they would affect any other employee.”
The power of the pivot
Nacewicz, who has done campaigns for Jazzercise and Midol, said as a content creator, she’s learned how to pivot, and she’s prepared to do it again amid the current economic climate by fine-tuning her audience engagement strategy.
“I am used to pivoting and having multiple streams of income,” she said. “So I am making sure I still continue to provide value to my audience and build a strong content and affiliate strategy.”
Davis, who has more than 100,000 followers on Instagram, said she also plans to tweak her strategy in the wake of advertising spending’s expected slowdown. Growth in global ad spending is expected to slow by nearly 6% in 2023 as sweeping layoffs hit major media brands, like Disney, Comcast, Paramount, and Warner Bros, and as the ad business cut 2,500 jobs in November.
To withstand the effects of these cuts, Davis said she plans to turn her focus to expanding her audience and increasing her reach so she can diversify the types of brands she works with.
“I want to begin to be even more active on social media so that I can make the most of the platform I have been given,” she said. “I see this as an opportunity to excel in the social media world so that I can continue to create revenue for myself and partner up with brands all over the country and even the world.”
Staying flexible in the unknown
Davis’ mom, Amy, manages her and her three sisters, who started out as YouTube creators in 2018 and are all now influencers. She helped her clients navigate through turbulent times before, including the COVID pandemic. She said the biggest takeaway is the importance of staying flexible.
“In those times of uncertainty, I found that the more innovative and adaptable we became, the more opportunities arose,” she said.
As the industry undergoes its first-ever recession, creators are in a good position to weather the storm as brands look to make the most of every dollar spent by tapping into the influence of creators to reach their target audience without spending heaps of cash on celebrity endorsements or hours upon hours developing complex marketing strategies that don’t convert.
Davis said she’s seeing firsthand how influencers become key assets during a downturn thanks to their affordability and loyal audiences that are eager to purchase the things they recommend. In fact, it’s been historically proven that reallocating marketing spending toward channels that are budget-friendly and purpose-driven is the best way to keep thriving during a recession.
“We have not seen a drop in brand deals due to the economy. Actually, we have seen more interest and business on that front,” Davis said. “Based on my observation, the most innovative companies are shifting their marketing budgets toward influencers and away from broader reach marketing vehicles like mailers, pop-up ads, and billboards. The increase in streaming vehicles has significantly decreased TV ads, which have increased online advertising as well.”
Although Nacewicz has seen a drop in demand, she said she still understands the value she brings to brands, particularly when the economy is struggling, and remains hopeful for a strong 2023.
“Influencer marketing is effective and affordable for many brands,” Nacewicz said. “They can spend a fraction of the cost—opposed to print or commercial ads, and actually target and reach their ideal audience.”
When money is tight, consumers hesitate to make purchases. Nacewicz said the trust that influencers build with their communities encourages them to purchase the products they recommend, helping bolster sales even in the toughest economic times.
“Usually their followers are very trusting of them because they have taken the time and built trust factor with them,” she said. “For example, my community knows that I really only take on brand campaigns from brands that I genuinely use or have tried out and really like, so they trust my recommendations. Also, I take the time to chat with them in my DM’s, so they seem more like friends and acquaintances than ‘followers,’ which helps build that trust factor that I hold so dear!”
Creators helping creators
Davis said she plans to lean on the creator community when times get tough. If she starts to see a significant drop in brand deals, she said she would tap into the power of collaboration to help hedge against some of the effects of the recession hitting the creator economy.
“I have plans to collaborate with other influencers to do giveaways so that we can support each other in this business even when times become difficult,” she said.
According to Davis’ mother, Amy, no matter how the economy is performing, creators can continue to thrive by leading with authenticity, a trait that becomes more important than ever during economic slumps. As consumers look for influencers and brands they can connect with and trust during economic downturns, the creators with genuine passion and purpose at the center of their content—and who don’t just post what they’ve been paid to advertise—are the ones who will survive.
“I continually advise my daughters, as well as my author clients, not to try to gain followers or readers, rather, to do what they do best in the most excellent, innovative, and passionate way,” she said. “When your brand is clear and consistent, with a great marketing strategy, the followers will come. I also advise clients to be generous with those in their fields, ask questions, and help their peers. This is about more than strategy. It’s about making the culture of ‘influencers’ better, using the platforms they’ve been given to make a positive impact.”