When companies find themselves in tough economic times, you’ll inevitably see budgets being cut, purses being tightened and projects being shelved or even cancelled. Typically one of the first budgets to be reduced is the marketing budget.
But is there an argument that marketing budgets should be maintained or even increased in such times and cost savings found elsewhere?
Chairman of Beattie Communications, Gordon Beattie believes so, stressing that maintaining or increasing the marketing budget is exactly what companies should be doing in hard economic times:
“The big mistake many companies make is to slash their marketing budgets when times get tough. It’s a foolish move and a bad decision. If sales are tumbling, a business requires more visibility – not less.
“We have increased our PR and media relations activities for all our brands and we have stepped up spending on search engine optimisation and pay-per-click.
“We have ramped up social media activity sites such as Facebook, Twitter, LinkedIn and YouTube. In addition, we have been exhibiting at conferences, writing more blogs and targeting prospective clients by email.
“The increased activity has had a huge impact on our businesses in terms of new clients and additional fees.
“If your business is going through a tough time – cut your costs but not your marketing budget.”
Other individuals cite that marketing spend in a recession should be seen as an investment rather than an expense. Losing visibility is a real concern for businesses cutting marketing budgets – these cuts can mean cutting yourself off from potential sales and missing opportunities for growth.
Statistics have shown that businesses that continue to invest in marketing during tough economic times witnessed growth versus those that pulled the plug on marketing spend and the resultant effect was a significant decline and drop-off in sales and enquiries.
In essence, by reducing communication with your clients, you are reducing short-term sales, which in turn will negatively impact profits. This course of action will bring about immediate short terms benefits, but will also mean that you will lose market share and not be in a strong position once the recovery is complete.
Marketing in economic downturns features changes in three key areas:
– Budget changes
– Consumer behaviour
– Market changes
Looking more closely at the second change, consumer behaviour, this shows how businesses need to work smarter to simply maintain sales. Consumers will typically spend less and delay major purchases, potentially downgrading to cheaper alternatives on commodity items and giving more thought and research into more expensive items. Whilst the consumer will alter their buying patterns, they will not stop buying – moreover they find ways to shop smarter. The same applies to businesses – the spend will still be there, but they will have to work harder to justify costs. In this way the campaign return on investment will become a crucial part of their planning and justification for any activities.
Market changes cover a range of facets, including reactionary companies that are able to predict trends and offer new products or services to meet these needs as a stand-alone offering or through diversifying existing services, as well as tailoring products, prices and services to meet those evolving requirements. Examples of this include short-term loan companies and debt recovery businesses that spring up and thrive in hard economic times.
If we can draw any conclusion at all, perhaps before slashing your marketing budget, have a conversation with respected business experts, long-established companies, who have thrived in previous downturns and ultimately do your research carefully to calculate what impact this will have on your business in the long-term versus maintaining budgets – it could draw interesting findings.
* Quote taken from http://www.beattiegroup.com