Why Now Is Not the Time to Cut Your Marketing Budget!
Marketing is an ill-understood field. It’s commonly confused with sales or public relations, and many business people outside the marketing world have a limited understanding of what marketing actually does.
For those reasons, it’s often the first line item to be cut in times of economic uncertainty. The problem with this fact is that study after study after study—over decades and through several recessions—has found that when times are tough, marketing is actually more important than before, not less.
Marketing Drives Long-Term Revenue
There’s an adage that captures this well: “If sales are your problem today, marketing was your problem 12 months ago.”
The role of marketing is, in many ways, to establish a relationship between your brand and the market (consumers). And building this relationship, like any relationship, is a long-term process. It requires cultivation over a series of touch points over time, all of which combine to keep your company top-of-mind for consumers and build a positive reputation.
The idea is that when these consumers are ready to buy, whether that’s tomorrow or two years from now, they’ll remember your brand and purchase from you rather than a competitor.
The problem here is that when finances are tight, executives have a hard time thinking long-term. It seems simple to cut back on efforts that won’t pay dividends immediately, so it’s common for marketing to be the first to go.
Resist the urge to go this route. All you’re doing with this strategy is giving yourself a bigger revenue problem down the line. In six months, or eight months, or a year, you’ll be wondering where all of your customers went—and the answer will stem from your marketing cuts.
If it helps, you can think of your marketing costs as the costs of acquiring and maintaining your customer base. Or, put another way, marketing is the cost of generating revenue. Why would you cut back on those efforts?
Marketing in a Downturn Is More Effective Than Usual
This next point is hard for some people to grasp, but it’s especially important and compelling. It has been proven—time and time again—that you’re actually better off increasing your marketing spend during a downturn rather than decreasing it.
The main takeaway from these studies is that companies that invest in marketing during a recession achieve greater gains in market share (both during and after the downturn) than companies that cut back.
There are many reasons for this, but they all come down to the fact that there are fewer competitors in the space. When times are tough, despite best efforts to convince them otherwise, many companies will cut marketing spend. Those people won’t be pushing marketing campaigns, so marketing and advertising spaces become less saturated.
For one thing, this often means that advertising costs go down. Ad costs are designed to reflect the amount of competition in the market. Fewer players mean that your cost decreases, even if you don’t change a thing about your execution.
For another thing, fewer voices in the conversation mean that audiences are more likely to absorb your message. Let’s say there are typically 15 companies in your industry that market heavily. If there are only five in the midst of a downturn, you can do the exact same thing you were doing before, but your share of the conversation has just tripled. You reach more consumers with the same marketing tactics because your brand now accounts for more of the industry’s visibility.
What does this mean long-term? Consumers who interact with your ads today are getting regular reminders that your brand exists. When the economy improves and other brands rejoin the conversation, they’ll be working double-time to catch up and remind audiences that they exist. Your brand, on the other hand, will already be top-of-mind when it comes time to make a purchase.
If You Must Cut Your Budget, Cut Strategically (But Only If You Must)
If you’ve cut every other possible expense, and now you have to turn to your marketing budget for savings, at the very least, don’t eliminate your budget entirely. Many companies will scrap marketing as a concept until finances turn around, but there’s another approach.
Look carefully at each of your specific marketing tactics, and make cuts from there rather than making sweeping cuts to your whole strategy. Most brands can eliminate a few underperforming efforts without tarnishing the overall impact of their marketing efforts. This process is more time-consuming, yes, but it allows you to maintain most of the marketing benefits mentioned here.
If that applies to you, remember to also assess your finances regularly and reinvest fully in marketing whenever you can. As you can see, it’s in your best interest to revive a holistic marketing strategy as soon as possible.
Ultimately, marketing is an investment in the future of your business. And, like any investment, you have to believe in the long-term payoff when you put money into it today. Your revenue and relationships with your customers in the coming weeks, months, and years depend on your marketing choices right now. So continue that investment as long as you can and reap the rewards down the line when your competitors are struggling.