As is the tradition in an economic downturn, by now you’ve seen one or two articles, or received a thought leadership e-mail that will remind you “Why cutting your advertising or marketing budget when times are tough is a bad idea.” I counted twelve such petitions in the last seven days!
In the last few weeks, many of us have seen customer demand fall, revenues decline, cash flow dry up and contracts nulled.
This means we need to find every cent we can to keep our businesses afloat.
You’re probably already looking at cutting operating costs across your organisation, whether its your payroll expenses, supplier contracts or admin overheads.
But you may not have given your marketing expenses the attention they deserve during these troubling times. This post is not about spending more on marketing. It is about pausing for a moment so that you can ‘reset’ your campaigns and budget – to make sure that they are contributing positive cash flow again – as most likely, they are not today.
Reboot your Marketing Budget
Marketing is typically your highest expense outside of human resources and in normal trade you are probably spending around 10% – 30% of your revenues in sales and marketing related investments. That’s all fine and well in a pre-pandemic market, as it was most likely contributing to a good bottom-line profit. But, if your revenues just fell 50%, your marketing investment just doubled to 20% – 60% of revenues, which in marketing language is “some expensive bullsh*t!” (ref. Marketing 101).
So rebooting your marketing budget will correct the investment proportion. In the above case, you’d probably have to halve your marketing spend.
But, if the current pandemic phantasm is teaching us anything, it is that these are not normal times. It is a time that calls for serious introspection and scrutiny. It has also revealed the incredible creativity, adaptability and innovation that humans possess. So I urge you to get creative with your marketing campaigns and strategies, and ignore the “spend more” cacophony.
To start with, if you have a good campaign tracking regime in place, you will know how many profitable leads each campaign or budget item is driving – even the so-called “brand building” exercises. Sort your marketing activities in category order, from best performing to worst performing, and then start cutting or trimming all those campaigns that are at the bottom of the list.
Once your budget has been trimmed, you need to review the specific campaigns or activities that were running within those overall budget categories, as they are bound to behave very differently from pre-COVID19 trading conditions.
Don’t assume that your historical marketing metrics will hold up going forward. You are going to have to scrutinise everything. That may result in you re-optimising each of your activities to account for learnings from the new market conditions. So, relook at every sub-campaign within a marketing channel and make sure it is still working its magic. If not, change the settings or messaging, or cancel it completely.