Henry Ford, one of the greatest business owners in history, once said, “Stopping advertising to save money is like stopping your watch to save time.”
There are winds of an economic downturn blowing, even though the jobs market still seems to be doing well and the stock market hasn’t tanked, even though the inverted yield curve (a sign of a recession) is getting more pronounced.
What is your company going to do to prepare? Freeze hiring? Reduce capital investments? Automate more?
You might be tempted to cut your marketing budget, and if your company is closely tied to certain aspects of the economy, this might be a practical way to save money.
However, we beg to differ. Cutting back can create long-term damage to your brand, and you’ll have a harder time gaining that market share back when the economy returns.
See five reasons why maintaining your marketing budget during an economic downturn is a good idea and one reason why it isn’t.
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1. Gain More Market Share
Watch your competitors closely during an economic downturn. Are they cutting back on their online advertising? Did they stop writing blogs? Do you see fewer job listings than you did a month ago?
When you see your competitors cut back, now is the time to seize the moment and gain more market share. When the economic doldrums pass, which they will, you’ll have a better market position by maintaining your marketing campaigns. Your business will be more visible, allowing your staff to land more contracts and customers versus competitors that cut back.
Make sure you re-engage with current customers to see how they’re doing. It’s always better to work with your customers and keep them happy rather than lose them. When the economy turns more robust, your loyal customer base will think of your company first as they ramp up production.
In one timeless example, Kellogg increased its advertising budget in the 1930s while Post cut back. By the time the Great Depression ended, Kellogg’s profits rose nearly 30%. Since then, it’s been America’s top cereal brand, according to Forbes.
2. Do More With What You Have
Rather than cut back on your marketing budget, maintain it and find ways to make it go further by innovating. Explore new marketing strategies based on the behavior of your target market in the B2C or B2B space.
For example, you notice your audience’s buying patterns change gradually. Instead of purchasing larger products or packages, they opt for less expensive offerings. So, your marketing team decides to advertise discounts on packages rather than regularly priced items. Lower prices on your part can lead to higher volume, especially if you see what your competitors are doing.
3. Invest in Better Tools
Have you been thinking about investing in more advanced digital tools? Invest wisely by researching the correct software to add to your arsenal. Internal teams, including your marketing staff, will work more effectively when given the right computer programs to do their jobs.
Many platforms out there can digest marketing analytics and automate your marketing. But have you considered tying your marketing platform to financial, accounting, or procurement? Low-code or no-code applications and APIs can connect seemingly disparate programs so you can mine information to develop insights.
For instance, your marketing automation software denotes when and how your efforts generate leads and sales. Your analytics platform then follows that sale to your procurement platform, where your team negotiates with vendors, followed by your accounts receivables software that monitors how much money your orders bring in. A comprehensive analytics platform can mine data along any touch point and show how much profit a particular sale makes by looking at as much information as possible. Focus your KPIs on your return on investment.
Having more thorough analytics tools gives your team a better understanding of how your marketing efforts pay off and what you can do to improve your bottom line. If your sales team lands a contract for $10,000 and you expect a profit margin of 30%, but your profits come in lower than late, a complete analytics suite can illuminate where the snafus occurred. Did your team take more time to finish the work? Did vendors charge more than what you expected?
4. Educate and Train Who You Have
It’s easier (and less expensive) to retain employees you already have than it is to find someone new. Rather than try to hire a specialist or expert in a particular area, use any slowdowns to keep your high performers and train them in multiple aspects of your company.
Sales are closely related to marketing. Perhaps you can train your sales staff to understand more about marketing since they have slightly different methodologies, but the end goal is the same. Marketing leads to sales, but both use different tactics to achieve more company revenue.
Training people on other aspects of company operations can make your team more efficient. It also gives you an opportunity to ascertain any knowledge gaps among your team. Look for free training modules for various things.
Keeping your marketing budget intact by cross-training some employees strengthens your staff and makes your team more efficient. Training your staff on marketing also gives them the flexibility to pivot quickly and restructure your efforts.
5. Partner With Experts
A marketing agency helps your marketing budget go further. Rather than paying one person to optimize your efforts, hiring an agency gives you an entire team on your side. Marketing experts can help you assess your current strategy and determine the best path forward, whether you choose content marketing, paid advertising, or inbound marketing efforts.
One Reason You Shouldn’t Keep Your Marketing Budget: It Costs Money
Marketing costs money. Your company’s marketing budget should hover around 10 percent of your annual gross revenue. If you absolutely must cut back on marketing, don’t cut back all the way. Figure out what you can keep and make it very efficient. Use what you learn from the cutbacks for when you can increase your marketing budget back to pre-downturn levels.
Improve Your Marketing Now by Hiring Experts
No one wants to lose money during an economic downturn. But, just as quickly as the headwinds pin you back, they can reverse course and push your company forward at top speed. Marketing can help you weather the storm.