January 2, 2013 by Kimmo Linkama
Automatic marketing budget cuts—a bad idea even in a slow economy
While Western economies are slowly recovering from the recession, the recovery will most probably be slower than we thought and hoped. Some industries will do better than others, of course, but it wouldn’t be surprising to see many companies facing big difficulties in meeting their targets.
As always, a slow economy means tight budgets and continuing frugality for industrial and B2B marketers. If you’ve been thinking of cutting your marketing budget and staff, however, I’d like to point you to some online articles that you might want to read before taking any hasty measures.
Del Monte CMO: Spend During Downturn—or Else (Ad Age CMO Strategy, June 2, 2009) The old way of dealing with a recession was to slash and burn head count, marketing and capital investment. But companies that do that are likely to be out of business in five years.
A Data-Driven Reality Check for Your Marketing Budget (Entrepreneur, September 20, 2012)
The increased spend required during the recovery just to get back to pre-recession sales levels within a year will have to be around 60 per cent higher than the amount saved by cutting the ad budget in the first place. In other words, if I cut my ad budget by a dollar during the recession, I will need to spend an additional $1.60 to get back to even once it ends.
Planning 2013 Marketing Budget? Forrester Consulting Study Suggests Investment, Not Cuts (Act-On Software, Inc., November 16, 2012)
Top performers did not cut marketing spend as aggressively as the bottom performers. Far fewer reported cutting their budgets (33% versus 56% bottom performers). Top performers are investing more in both program spend and staff. 65% of top performers report spending levels above 2% of revenue (which is the large enterprise average on marketing spend).
Writing a Business Plan? Don’t Forget About Marketing (Entrepreneur, January 1, 2013)
No matter how ingenious your product or service, no one will find it if they don’t know it’s there.
I hope these articles will give you enough background and an incentive to really think about what reaching your targets requires.
Perhaps you’d also like to read an earlier blog post about marketing spend in a slow economy: How to survive in a downturn economy (written in 2008, but still gold).
How does your marketing budget for 2013 look? Let me know in the comments!