Destroying the myth: cutting marketing budgets during financial crisis is a “smart move”
“When things turn around, I’ll make marketing a priority again”.
Eliminating the brand enhancement and lead generation that marketing provides will likely only make it more difficult or even prevent things from “turning around.” When facing financial hard ships, you should run to marketing investments, not away from them. Data suggests that marketing budget cuts may be the most costly of all, and among the hardest to overcome.
Whether you’re a newer company, or a business that has been around the block, marketing is essential to your longevity. Companies that do not invest in marketing are often unable to retain their market position for long and will likely experience a loss of existing customers and difficulty winning new ones. Customers are at the core of any business. To think that marketing is not essential to a company’s success could prove to be a costly mistake.
A recent study conducted by IMPACTS examined organizations that had recently cut their marketing budgets by at least 15%. Results were shared in an article by Colleen Dilenschneider on her blog, Know Your Own Bone. The overarching result is that cutting marketing budgets negatively affects attendance. Not only did the study show that cutting marketing budgets decreases website visitation, but it also noted that attendance is not immediately recovered when marketing budgets are restored. Cutting marketing budgets is the “gift that keeps on giving” for two reasons, that are also correlated:
- Lost word-of-mouth endorsements: less visitation means less top-of-mind conversations that customers are having about their recent experiences with an organization.
- It is far less expensive to retain your audience than to reacquire them: the organizations that cut their budgets and then decided not only to reinstitute their original marketing budgets, but also to add funding, were still unable to gain their audiences back.
That being said, it is important to know which marketing investments make sense for your business. Calculating ROI is a necessary evil in the marketing world, especially for businesses that are under financial pressure. However, one of the difficulties with marketing is that results are rarely immediate and occasionally unquantifiable. This is less often the case in today’s world, but it is still an evergreen obstacle. When you measure ROI you can make educated decisions on which marketing investments are worth pursuing, and which ones are not. Some marketing tactics are easier to access ROI than others. If your organization is going through financial hardships, it could be worth the time to investigate options that have a clear path to reach ROI data.
- Try increasing your outreach instead of decreasing it. Even in tough economic times, your services are still needed.
- Shift your budget to the most influential marketing tactics. Review their effectiveness and tweak when necessary.
- Take advantage of technology! Increasing your social media exposure might take time, but the financial investment is minimal.
- Marketing should be thought of as a “revenue generator.” Without it, staff may find difficulty promoting products and services to potential customers.
Bottom line: there is a need for consistent marketing for brands to stay top of mind. Do not use marketing like it’s medicine to fix a problem; use it like food to help nourish and grow your brand!
To learn more about marketing trends and consumer behavior, contact us at 585.421.0100.