The current economic climate in the U.S. can be described as “cloudy” at best. According to CNBC, Much of this uncertainty is due to factors like inflation, the Federal Reserve’s interest-rate policy, the U.S. dollar’s strength, and the Russian invasion of Ukraine. Well, it’s not just economists and the general public that have taken notice — the entire cybersecurity community has, too. In response, the cybersecurity industry has started strategizing potential best practices to mitigate any potential challenges, especially as they relate to PR and marketing teams. So, what’s the current status and what can we expect moving forward? Further, where are companies likely to cut back and what are the areas that need to maintain steady investment? Let’s explore.
Opportunity calls in cybersecurity
Economic downturns, no matter how severe, are the best time to build companies, according to Alberto Yépez, Managing Director and Co-Founder of Forgepoint Capital. This rings particularly true for cybersecurity. Less competition means greater opportunities to be more strategic when launching and building a company. Prime examples from the 2008 economic downturn included current industry giants like CloudStrike, Palo Alto Networks, and Zscaler. Additionally, from the demand side, companies and governments (and even individuals) have a heightened awareness more than ever before that they need enhanced cybersecurity solutions. For many businesses, the pandemic-driven era of remote work has accelerated the need for new and innovative cyber solutions that can plug holes that weren’t there just two years ago. This leaves the vendor, or supply side of the equation, ripe for opportunity. PR and marketing teams can capitalize on this cybersecurity zeitgeist by working closely with clients to determine where potential gaps are between them and their competitors. Therefore, PR and marketing teams must fully understand what makes them unique, stand out, and garner attention in a crowded and fluctuating market.
Sustained M&A activity
Even though well-established organizations can weather these types of economic storms — and, in some cases, even see some positive growth — smaller companies aren’t typically afforded the same luxury. This is largely due to the size of their pocketbooks. However, considering that there will always be small, agile, and innovative organizations emerging from their cellars rain or shine, we’ll continue to see a great deal of merger and acquisition activity no matter the market conditions. With so many healthy options readily available, large organizations often have the pick of the litter when determining their business strategy. A handful of recent examples include Google Cloud acquiring Siemplify in January, Cloudflare purchasing Area 1 Security in February, and SentinelOne acquiring Attivo Networks in March, among many others over the past six months.
PR and marketing teams also need to take notice because they must have an open line of communication with clients if any business priorities, or SME swim lanes, change. That way, they can shift strategies (paid vs. earned PR, increased lead generation activity, etc.) in order to keep sales steady and promote their brand regardless of the people involved.
Cybersecurity budget cuts and layoffs
It’s also worth noting that the past 12 – 24 months have created a false reality in terms of increased spending, considering the sheer amount of layoffs we’re seeing across not only cybersecurity, but tech as a whole. From Lacework to OneTrust, Snapchat, and even Netflix, C-Suites and boards have been considering areas where they can cut expenses. Oftentimes, departments like PR and marketing or research and development are near the top of the list. That being said, according to Yépez, this can be very short-sighted given that PR and marketing initiatives can help shape companies to be perceived as market leaders during these times. For example, he noted there was a large marketing pull-back at the onset of the pandemic that came back with a vengeance in 2021, yet we’re starting to see a directive to cut it again. This could be a critical mistake for any organization looking to enhance its notoriety in the marketplace. When looking to justify marketing and PR spend during this time, teams need to focus intently on measurement and showcase any relevant data and analytics that justify ROI. Whether it’s cutting events in favor of lead generation campaigns or even calling out tier-one wins from the PR side of the house, ensuring that companies are seeing tangible results from their investment is an absolute necessity.
The great cloud migration
Another significant development affecting the broader cyber economic climate over the last couple of years has been the massive migration to the cloud. But from the buyer’s perspective, there’s a question as to whether assets in the cloud are actually secure.
The industry is off to a good start, though many suggest we’re only 25% of the way there and still have a multitude of cloud migration misconceptions to overcome. It’s not as easy as just picking a cloud provider and then being done as many are led to believe. Organizations big and small need to use multiple platforms to get programs to run properly on the cloud. Internally, security teams and employees still have to deal with a multi-cloud environment. It’s not just governance with privacy issues, but there’s huge overhead and significant investment to manage this infrastructure and protect both constituencies as well as all their data. In turn, demand has been huge. Again, it’s largely accelerated by the pandemic because the onslaught of attacks on organizations big and small ultimately showed everyone how vulnerable we were – and still are. PR and marketing teams can also be instrumental here as well by educating the industry and its decision-makers, whether they have a cybersecurity background or not, on this increased need for cyber defenses. By taking this into consideration, there will be even more demand for a client’s solutions.
“Partly sunny” forecast
Although both the economic future and advancements in cybersecurity may currently seem so unpredictable, cybersecurity is here to stay and innovative solutions will keep emerging. The market is secular and its long-term forecast is still “partly sunny” even though the horizon looks cloudy right now. Based on our observations and client interactions, we believe the funding in cyber and tech overall will return sooner than many think. In fact, top venture capital firms focused on cybersecurity are already starting to raise new funds as we speak. For the marketing and PR teams who operate in this space, we highly recommend staying as agile as possible during a time of vast unknowns. By working closely with clients to figure out what will and won’t move the needle, teams must be able to pivot on a dime to determine the most relevant priorities at any given time. For help standing out in the crowded security market and driving additional awareness, visit our Security page or contact Michelle Schafer, Senior Vice President and Partner, at schafer@merrittgrp.com.