With the RBA indicating that an economic downturn might be a ‘necessary evil’ to drive down high inflation, is Australia headed for a recession? And, how does marketing efforts change to meet the needs of consumers?
According to NielsenIQ (NIQ) reports and consumer data from late 2024 to early 2026, Australian cost-of-living pressures have led to a shift towards ‘intentional’ spending, with nine-in-10 Australians feeling the impact of rising prices.
The financial sentiment of Australians shows around 50 per cent of the nation feel worse off financially, with many feeling the pinch of increased costs.
We asked four of ANZ’s leading fractional chief marketing officers about their thoughts on marketing models during a recession – how it will be impacted by the war in Iran, the cost-of-living crisis influencing consumer behaviour and whether there is even an appetite for non-essential spending.
The autopilot consumer is waking up
Pip Stocks, marketing consultant and CEO of The Startup Muse said in 2014, she ran a study looking at how people made everyday purchasing decisions.
“What we found was that a surprising number of purchases happened almost unconsciously. People bought the same brands, in the same stores, with very little active thought.
“We described it as autopilot consumption,” added Stocks.
“But pressure changes behaviour. When households feel financial strain, habits get questioned. Assumptions get revisited. Purchases that once happened automatically suddenly require justification.”
Human behaviour is changing in the face of inflation
According to Dr Anna Harrison, keynote speaker, founder of RAMMP and inventor of the ADORE Process (the only patented methodology for measuring trust in the buying journey) believes you need an equal dose of realism and hope when building your marketing models to withstand the perils of a recession.
“While I personally am an optimist, even for my rosy-coloured outlook it’s hard to ignore the prevailing winds: interest rate rises, supply chain disturbances, wars, escalating costs of power and petrol – all of these factors have ripple effects that are going to make their mark on your brand this year.
“I can, with a good degree of certainty, tell you how your customers will change their buying behaviour as we enter recessionary conditions,” added Harrison.
“The reason for this is that as humans, we behave in quite regular and predictable ways, and as anyone who appreciates AI and computer science will tell you, a pattern is a wonderful thing. A pattern allows us to develop systems to optimise situations – indeed, we used these patterns in buying behaviour to build RAMMP to help brands navigate the uncertainties of pandemic and recessionary conditions with more confidence.”
Common mistakes marketers make in uncertain times
Geoff Main, marketing director and founder at Passionberry Marketing said “Consumers are looking for ways to balance budgets without sacrificing quality of life. They might eat out less, but spend more on premium groceries. They may delay holidays, but invest in better at-home experiences. They may switch brands in low-attachment categories, while staying loyal in high-trust ones.”
“This creates a more complex market than a traditional downturn,” added Main.
Such complexities mean the familiar marketing habits quickly lose their effectiveness.
“Blanket discounting, for example, can erode brand value without addressing what consumers are really looking for: a clear reason to buy,” he said.
“Broad brand messaging that lacks practical utility also struggles to land when people are scrutinising every purchase.”
Another common mistake is assuming all consumers are cutting back in the same way, when in reality the market is fragmenting, with some households trading down while others remain willing to spend on things they truly value.
When people are actively weighing trade-offs, brands that make decisions simple and transparent will always have the advantage.
In constrained markets, justification is critical
Fractional CMO Fabrizia Roberto, warns marketers that this is not a moment to retreat, but a moment to recalibrate. When the environment strips things back, what’s left is the core of the discipline – understanding people, meeting them where they are, and creating something that genuinely earns its place in their lives.
“That’s always been the job, it’s just harder to shy away from it now,” added Roberto.
Consumers are also becoming more deliberate in how they research and compare purchases.
“As financial pressure increases, decision-making slows and evaluation increases. Buyers spend more time understanding options, comparing alternatives and justifying purchases. This changes how marketing needs to work,” said Main.
“In growth markets, marketing is often about persuasion. In constrained markets, it becomes about justification. And, this is where many brands get caught.”
“Discounting is often the first response to economic pressure. But blanket discounting can erode brand value, compress margins and train customers to wait for promotions. Instead, brands that perform well in constrained environments tend to shift toward value framing.”
That means emphasising durability, cost-per-use, efficiency, time savings or bundled value, as opposed to simply lowering price.
What marketing metrics hit the mark during economic downturns?
In this environment, the role of marketing becomes more grounded. Helping people make decisions becomes more useful than trying to influence them from a distance.
Roberto believes marketing during tough times hones in on four key metrics: value, context, consistency and transparency.
“Value needs to be easy to grasp. If someone has to work to understand why something is worth it, they’ll move on,” said Roberto.
“Context matters more than static audience definitions. The same person behaves differently depending on what they’re buying and what trade-offs they’re managing that day.
“Consistency carries more weight. Every touchpoint becomes part of how a brand is evaluated, not just the campaign.
“And, transparency builds confidence. When people are comparing options more actively, clarity wins.”
On the other hand, some lazy marketing habits don’t survive this kind of scrutiny.
“Messaging that feels disconnected from real life loses traction quickly. Complex pricing erodes trust. Assumed loyalty becomes fragile,” added Roberto.
When people are more deliberate, they’re also more open to brands that make their lives easier, that understand and respect their constraints and that deliver reliably.
Helping someone feel confident in their choice is incredibly valuable. Showing up as a meaningful brand that truly cares about the consumer is where the magic happens.
The rise of the two-wallet economy
Another important shift is the emergence of what economists describe as a two-wallet economy.
Cost-of-living pressures are widespread, but they’re not evenly distributed. Some households are cutting spending aggressively, switching brands and delaying purchases. Others remain financially comfortable but are becoming more considerate about value.
“In uncertain economic conditions, marketers often default too quickly to price cuts. But the real opportunity is to reframe value, not just reduce price. That means helping people understand why a purchase makes sense right now. Sometimes that’s about positioning a product against real-life alternatives – for example, showing how something fits into the trade-offs people are making, like “instead of dining out,” said Main.
It’s also about building trust.
“Proof points, case studies and clear reassurance become much more powerful when people are scrutinising their spending. At the same time, marketers should be thinking beyond short-term sales and focusing on retention and customer lifetime value. Designing offerings that work for both value-seeking and premium segments is increasingly important as the market splits,” added Main.
“In uncertain markets, helping customers quickly understand why something is worth it right now will perform the best.”
Six things matter more than ever
If we drill down to what the marketer needs in order to thrive in times of global uncertainty, Pip Stocks believes these six things will act as a bible moving forward:
- Be crystal clear on value – consumers want to understand exactly why something is worth the money.
- Show practical usefulness – products that save time, reduce hassle or genuinely improve life rise to the top.
- Remove friction by showing clear intent – complex pricing, confusing offers and unnecessary effort are quickly rejected.
- Offer flexibility – Smaller packs, entry offers and adjustable subscriptions help consumers stay engaged.
- Segment by financial mindset – The two-wallet economy means customers are not experiencing the market in the same way.
- Stay close to your customers – Really understand the needs of the customer on a deep and personal level. What people cut first – and what they refuse to give up – rarely appears in dashboards. It shows up in conversations.
A return to marketing fundamentals
Economic pressure often strips marketing back to its essentials and reveals the cracks of poor efforts with little thought for the consumer. Roberto believes this economic downturn is good for marketing.
“Because it removes the shortcuts. When consumers pay less attention, marketing can get away with a lot – vague positioning, inflated promises, over-reliance on reach and frequency,” she said.
“When consumers pay more attention, those things fall apart quickly.
“2009 showed how behaviour shifts toward the home, and how brands can turn that into something enjoyable. COVID showed how quickly adaptation can happen when businesses stay close to real human needs.
“What’s happening now sits in that same lineage. Different trigger but same underlying dynamic: people reprioritising and looking for value in ways that feel considered, not impulsive.”
Both moments – 2009 and COVID – are useful reminders that great marketing shines the most when behaviours change.
So, what’s actually happening now?
The data points to pressure but, more importantly, it points to intentionality. What remains are the fundamentals the discipline was built on: understanding people, communicating real value and earning a place in someone’s life.
