Why You Should Keep Your Marketing Budget During Economic Uncertainty26 min read
COVID-19 has taken a toll on businesses across all industries, whether due to closures or reduced sales as customers tighten their pocketbooks. And whenever less revenue is coming in, businesses naturally look to reduce expenditures.
Considered by many a “want to have” and not a “need to have,” marketing is usually the first cost to be cut. But the truth is that marketing is an investment that most businesses can’t viably do without.
If anything, marketing becomes even more important during economic uncertainty. Here’s why.
The marketing seeds you plant today will reap their benefits after consistent care and attention.
Drive Long-Term Revenue
Marketing is a long game — a gradual building of relationships between your brand and your customers.
Like with any relationship, this process does not and cannot happen overnight. The idea is to slowly cultivate brand awareness so that when the individual is eventually ready to purchase, they think of you and not your competitors. Think of marketing as the process of gaining and maintaining customers, or the cost of generating revenue.
So when businesses cut their marketing to save money in the short-term, they’re actually setting themselves up for financial problems in the long-term. If you’re wondering where your customers went a year from now, your answer is: out the door with your marketing.
Increase Your Market Share
Remember that your competitors are facing the same challenges as you right now. In the event that they decide to cut their marketing budgets, you are well positioned to capture part of their market share with continued marketing efforts.
For example, during the 1990-91 recession, McDonald’s decided to decrease its promotion and advertising budget. Both Taco Bell and Pizza Hut chose to take advantage of the reduced competition, and grew their sales by 40% and 61%, respectively, as a result. McDonald’s saw a 28% drop in sales.
Maintain Brand Equity
Marketing promotes brand awareness, so it’s only natural that a halt in marketing will affect customer recognition of your company and products or services. But how much?
According to a study led by the Institute of Practitioners in Advertising, businesses that reduced their marketing budget by 50% during a recession spent three years recovering the brand equity they lost to competitors.
The study also found that reduced marketing actually magnifies the negative consequences of a recession, extending the impact beyond your business alone.
Capitalize on Reduced Digital Advertising Rates
Ad prices on Instagram and Facebook fell by 20% in March due to the COVID-19 pandemic. This drop in digital advertising rates is typical of any economic downturn, giving smart businesses the chance to advertise for less.
Another bargain to look out for: reduced prices for both editorial partnerships and direct-buy ad placements.
Focus on Retention
Retaining existing customers and clients is much easier than gaining new ones. If you don’t think you’ll be able to acquire any new customers during an economic slump, you may want to focus your efforts on customer retention instead.
Keep in mind that you don’t have to spend a lot of money to retain customers. Consider improving your customer service, setting up a customer loyalty program, or surprising your customers with free gifts or discounts.
Demonstrate Consistency and Strength
One of the best ways to build trust with your customer base is to show consistency and strength — even when times get tough.
When your communication remains consistent during economic uncertainty, your prospects will see your brand as dependable and stable. The only way to do this is through uninterrupted marketing.
Takeaways: How to Adapt Your Marketing During COVID-19
Cutting your marketing budget clearly isn’t going to help you weather this economic storm, and doing so may even hurt you financially in the long run. The future success of your business depends on the marketing choices you make right now, and that doesn’t change with the economy.
That being said, if you have already cut every other possible cost and you still need to further reduce expenses, don’t remove marketing outright. Instead, examine each marketing effort individually and cut strategically to reduce the impact to your overall marketing strategy.
If marketing cuts are necessary, regularly reassess your finances and reinvest in your marketing — and the success of your business — as soon as possible.
Make Smart Marketing Investments During COVID-19
Contact one of our marketing strategists to discuss which marketing efforts will go the furthest during COVID-19 and which you can do without.