It's no secret that cutting your marketing budget during a recession is one way to conserve expenses. But before you do that, stop and think about the long-term effects of such a decision.
Sales and marketing are the lifeblood of any company. When you cut back on investments in these areas, you're effectively cutting off your ability to generate new revenue. Falling revenue will require further cuts, in more departments, and before you know it you're in a full-blown downsizing spiral. In fact, studies have found that brands who slashed their advertising spend risked losing 15% of their business to competitors. Meanwhile, brands that increase their spend saw a 17% rise in sales.
So, how can you protect your budget from the chopping block? Let's explore some of the best ways to protect your marketing budget, and what to do with it when cutting is necessary.
Marketing is an investment, not a cost
Too often, marketing is seen as a discretionary expense that can be slashed at the first sign of trouble. But if you want your business to weather any economic storms, you need to start viewing marketing as an investment.
One way to do this is to think about your marketing budget as a percentage of revenue, rather than a set dollar amount. This will help you see marketing not as a cost, but as an investment that should fluctuate along with your company's sales.
Of course, there will be times when cutting your marketing budget is unavoidable. But that doesn't mean you should just stop all marketing efforts until things improve. Instead, use this as an opportunity to review your marketing strategy and find ways to make it more efficient.
Protecting your marketing budget during a recession
Here are four key ways to get the most out of your marketing budget during a recession.
1. Make a case for your marketing budget
The first step is to make a case for your marketing budget. This may seem obvious, but it's important to remember that marketing is often seen as a luxury, not a necessity.
When stating your case, be sure to emphasize the importance of marketing in driving sales and growth. You should also highlight the unique role that marketing plays in building and maintaining customer relationships.
It's also important to show how marketing can help drive efficiencies in other areas of the business. For example, if your company is looking to cutting costs, highlight how marketing can help by generating leads that sales can follow up on.
Finally, make sure you have a clear understanding of your company's overall goals and objectives during a recession. This will help you refresh your marketing strategy that is aligned with the company's overall business strategy.
2. Reallocate marketing investment and budget to reduce waste
If you do find yourself in a position where cutting marketing budget during a recession is necessary, there are a few things you can do to make sure your cuts are as effective as possible.
First, take a close look at your current marketing mix and make sure you are allocating your resources in the most efficient way possible. There may be some areas of your marketing strategy that are not generating a positive return on investment (ROI). If this is the case, cutting these activities can help you save money without sacrificing too much in terms of results.
Second, consider strengthening your organic social media and SEO efforts. These are long-term strategies that can help you build your brand and generate sales, even when ad spending is tight.
You may also want to consider renegotiating contracts with your current marketing partners. For example, if you are paying for a monthly retainer, you may be able to get a discount by agreeing to pay for a longer period of time upfront. Or, you may be able to renegotiate the terms of your contract to be more in line with your recession goals.
3. Be creative with how you spend resources
A big part of effective marketing is being creative with how you spend your resources. There are many ways to stretch a small budget and still get results.
For example, if you're marketing strategy has a big focus on content production, consider ways to create that content more efficiently. Can you outsource the work on sites like Fiverr? Can you alleviate your agency's hours in any way? If you can't afford to produce new content, get creative with what you have. Repurpose old blog posts, create infographics from data you already have, or make videos from customer testimonials.
Similarly, if your focus is on paid media advertising, think about ways to get more out of your existing campaigns. Can you improve your targeting? Can you test different ad copy or landing pages?
Remember, time is as much of a resource as money. If you can find ways to alleviate time constraints on your marketing teams, you'll free up more resources to put towards big-picture thinking.
4. Never stop marketing
It's easy to think that cutting your marketing budget is the best way to save money during tough times. But in reality, this could do more harm than good. In fact, studies have shown that companies who maintain or increase their marketing spend during a recession actually outperform their competitors.
Before cutting marketing budget during a recession, consider these three things:
Your brand: If you stop marketing during a recession, customers might forget about your company or think that you're no longer in business. This could hurt your brand and make it harder to attract customers when the economy improves.
Your competition: If your competitors maintain or increase their marketing spend, they could steal market share from you. This could make it harder for your company to recover down the line.
Your cash flow: If you cut your marketing budget, you could see a decrease in revenue, which could put a strain on your cash flow, which has a direct effect on all other departments.
Adapt and rethink
The truth is, recessions happen. Markets crash. Businesses change. Protecting your marketing budget during a recession doesn't always mean keeping it the same. Sometimes, it means making changes to how you spend so you can get through to the other side. And that's okay.
The most important thing is that your marketing budget continues to drive sales and help you improve your positioning–even if you have to make some adjustments. So, stay ready and be prepared to adapt. That way, you can keep your business running--no matter what the economy throws your way.