I’ve been around long enough to know that at one point or another, all of us will face marketing budget cuts. In a downturn, marketing and marketers are often on the chopping block.
When leaders and companies start to worry about demand, they might think, “If there’s less demand to get, we’ll spend less to try to get it.” It’s a consistent behavior and phenomenon we see across industries.
I know a lot of blog posts might claim this view is dumb, and advise that you need to double down on marketing in the face of hard times, but let’s deal with the hard, cold reality today. At some point in the life of any business, marketing budget cuts are inevitable.
If you’re not facing a cutback in this current budget season, you will someday, so let’s look at some timeless advice to hold things together when the axe comes down.
Are you creating customers?
When people ask me what marketing is about, I have a simple answer: Marketing creates customers.
Now, the execution of that ideal is insanely complex, but at its essence, marketers should work every day to create customers. You can’t have a business without them, which is why marketing is so important.
If you are focused on that goal, in a time of marketing budget cuts, you can forthrightly ask your boss, “how many fewer customers do you want?”
So the first step in our effort to keep the axe away is to reflect on how well we are creating customers.
Often, it’s challenging to specifically attribute the impact of blog posts or an email campaign on customer acquisition, but in general, you should be able to track your current marketing budget, divide it by the number of new customers you’ve brought in, and determine your customer acquisition cost.
We now have the starting point for a budget cut discussion because we can frame the debate in terms of risk.
- What do we cut, and what is the risk to customer acquisition? Can the business afford to slow down customer acquisition?
- Have we found tactics that aren’t working? Can we offer them up for the chopping block without losing our jobs?
- If we’re facing a recession, is there a way to lower our customer acquisition cost but spend even more to take advantage of lower ad and marketing costs in the market?
Many case studies show increasing the marketing budget in recessionary times can change a company’s fortunes for years to come.
Brand marketing versus performance marketing
There are two different kinds of marketing expenditures, and budget discussions get cloudy if we don’t clearly differentiate our marketing spend and the goals.
The goal of performance marketing is a short-term impact on sales through tactics such as:
- SEO
- Coupons
- Targeted advertising aimed at immediate customer needs
- End-of-aisle displays
- Contests
- Sampling
- Email and direct mail appeals
Performance marketing is normally easy to measure as you track sales progress to clicks, redemption codes, and the timing of campaigns.
The goal of brand marketing is to establish a long-lasting emotional connection with customers that distances you from competitors. Brand marketing is essential as you try to stand out from a pack of intense competitors. Tactics can include:
- Sponsorships
- Advertising aimed at brand awareness
- Focus on brand messaging, design, and personality
- Brand communities
- Social responsibility
- Social media and content marketing
- Influencers (this can also reap short-term gains)
- Word-of-mouth marketing
In a recession, you may need to place your emphasis on performance marketing that drives short-term revenue. Performance marketing is easier to measure, and you’ll be under a lot of pressure to show the numbers in a downturn.
If you have the time, prepare for a downturn by establishing demonstrable gains from brand-building, like match market testing, to show the difference in results over two months between spending in one city versus not spending in another city. It’s a way to prove that your spending truly does matter to the company, but you just can’t measure it immediately. If you’re lucky, enlightened CMOs and CFOs who understand branding will have patience and understand they need both types of marketing in the mix.
A downturn could be the best time to take advantage of lower media and advertising rates to grow your brand. Be sensitive to the strategic needs of the business and be prepared to pivot.
Speak the language of your business
Inexperienced marketers, especially on the social media side, live and breathe “likes” and engagement. But these are not necessarily drivers for a business. In fact, they rarely are.
In a downturn, listen to the language of your business. Marketers need to apply a different level of rigor—a kind of chief financial officer or investor mindset to marketing. Regardless of what budget they have—high, low, or the same as last year — how do you show that your budget is working as hard as possible?
Do your best to be part of the solution if your business is suffering. What can you say to senior leaders to signal that marketing is actually a critical part of the recovery and long-term resilience? How do you tie your efforts to the language of the business (something we should do whether there is a recession or not!).
Use marketing budget cuts as a prompt to “look up”
Perhaps the most common problem I see in any marketing department is that they are stuck in the past. A department gets in a groove and stays there, like this:
- Roles are assigned but never updated for the times — people hate to change!
- “Best practices” from five years ago are probably obsolete
- Historic agency partner relationships and long-term contracts may be a scaffolding that props obstacles to change.
- Budgets are maintained year after year as a source of pride and power. But is the money truly applied effectively? Do you race to spend the budget at the end of the year to maintain the next budget level?
- Are there opportunities to use AI tools to drive massive new creativity and efficiency?
While a cutback can be scary, it can also be a time for renewal. You might even be able to make a case to re-distribute funds to achieve more effectiveness instead of simply cutting jobs.
The advantage of desperation
I present to you one of the greatest lessons of my career:
I used to work for a Fortune 100 company, and an early career assignment was at a manufacturing location that was the oldest and least efficient in the system. The plant was located in a small town — it was the primary source of employment for miles around.
These people needed those jobs. They were fighting for their community and their families. There was no corporate money to invest in the plant. But they ended up saving their jobs because desperation forged the most dedicated, hard-working, and creative group of people I’ve experienced in my life. Desperation can be fuel for radical innovation.
By contrast, in my next job, I worked for the most successful and profitable plant location. The amount of waste I observed was sickening. Management simply threw money at every problem.
I was so glad I experienced a desperate situation early in my career. It changed my view of creativity and leadership forever. Money can actually thwart creativity! Maybe a desperate moment can work for you, too.
Please build your personal brand
The best way to keep your job — or acquire the next one — is to be the most valuable human asset you can possibly be. Sure, you need to keep your skills up to speed and network, but it’s also vital to work on your personal brand.
If you’re known in your industry, you’ll be more likely to land on your feet, get more opportunities, and attract better pay.
Your personal brand is the only sustainable competitive advantage you can take with you from place to place. Working on your personal brand is like making a monthly deposit in an insurance policy for your career.
Resources to help you:
A free collection of blog posts on personal branding
The best-selling book on personal branding (it works!)
My live, online class on personal branding
A time for leadership
One of the most stressful times of my career was a complete organizational overhaul. This was one of those times when a consulting company is hired to come in and bring down the hatchet.
I had a friend who said, “I’m hiding. I am going to go underground and become invisible so I can survive this cut.”
I thought he was crazy. This was a time to show up even more … to embrace the change and be part of the solution. I took the opposite approach. Instead of cowering in fear, I signed on for whatever was coming next and made sure the consulting team could see my value.
I’ve been giving a popular new speech about how to remain relentlessly relevant. One of the main ideas is that in any crisis, any fracture in the status quo, there is a new business opportunity.
Surviving, and even thriving, in a time of marketing budget cuts involves applying the power of your personal brand to the new opportunities presented in a new reality.
Think of your personal brand as the surfboard that helps you navigate waves of change in the world. To be successful, you don’t necessarily need a new surfboard. You need a new wave.
The scariest changes in my career always led to big new doors opening. Don’t duck change. Embrace it, lead it, and show how your talents can be part of a brighter future for your company.
Follow Mark on Twitter, LinkedIn, YouTube, and Instagram.
Illustration courtesy Unsplash.com