By: Scott Wright and Jack Bowen
In an era dominated by rapid change and economic unpredictability, businesses often find themselves at the crossroads of making challenging decisions, especially when it comes to budgeting. One of the areas often eyed for potential cuts is marketing. But is this a wise move?
Slashing marketing budgets – in good times and bad – seems to be a time-honored tradition: According to a Gartner survey of more than 400 marketing leaders, 71 percent of top marketers felt their hands were tied by budgetary constraints in 2023.
For those considering the idea of cutting marketing budgets, we consider it to be a gateway to even more trouble: Though the temptation to pare back marketing resources may be great, it can have unintended negative consequences that can infect long-term growth, market visibility, and ultimately, the bottom line.
Today, we delve deep into why maintaining, or even increasing, your marketing investment for 2024 is not only advisable but potentially critical for sustained growth.
With economic conditions exerting pressure on businesses across sectors, the allure of tightening the proverbial belt becomes almost irresistible. As CEOs, boards, and leadership teams gear up for 2024, many are scanning for areas to cut costs.
But we’re here with a contrarian view: If you increase your spending on effective marketing strategies and tactics, they should generate many times the value of your marketing spend. And, revenue derived from those successful marketing programs feeds the engine that drives your profitability. The lesson? All dollars are not made equal.
Here’s what we mean. We’ve huddled with many CEOs faced with budget conundrums in annual business planning mode, and their believe is that if you cut $1, you save a dollar. Though this may be true if you cut it from operations, when you slice a $1 from marketing, you are losing out on many times that $1 in revenue opportunity (since marketing ROI tends to be a multiplier).
But further, by shutting down pieces of your marketing engine, you’re losing out on leads and sales that are still out there but may be hard to attract. Instead, in tougher economic times, you need to be more strategic, and smarter, than your competition. And, if we assume that your competitors are weighing the same budget cuts that you were, you may actually be able to play the contrarian and steal share.
In this blog, we’ll talk about the value of staying the course in tough economic times — and how a strong marketing strategy, with resonant executions and measurable results, can generate many times the investment in ROI.
"In the middle of every difficulty lies opportunity." - Albert Einstein
Before wielding the axe on your marketing budget, we recommend considering these three actionable steps:
1. Recognize Marketing as a Revenue DriverMarketing isn't merely an expenditure; it's an investment. Properly executed marketing initiatives can yield substantial returns. While cost-cutting measures may be necessary in certain areas, indiscriminately slashing the marketing budget can have detrimental effects. It's important to strike a balance between reducing unnecessary expenses and preserving the investment that drives revenue.
In the words of Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, "The best investment you can make is in your own abilities." This principle extends to business as well. Investing in your marketing capabilities, especially during challenging times, can yield significant dividends in the long run.
This is especially true in times of economic downturn, when the need to adapt and innovate is even more critical. This is where marketing plays a pivotal role. By understanding shifts in consumer behavior and identifying emerging trends, you can position your business to not only weather the storm but also thrive.
Finally, one of the critical metrics to consider is Return on Investment (ROI). With a robust marketing strategy and execution, you should aim for an ROI well above 5.0. According to leading marketing experts, such as Neil Patel and Jay Baer, a high ROI indicates that your marketing efforts are not just an expense but a strategic investment in your company's growth.
Patel, a prominent figure in the marketing industry, emphasizes that "marketing is not an expense, but an investment if done correctly." This sentiment underlines the transformative potential of marketing when approached strategically.
Actionable Insights:
"Good marketing makes the company look smart. Great marketing makes the customer feel smart." - Joe Chernov, Content Marketing Expert and Hubspot Executive
2. Navigate Economic Rough Patches with Precision
It’s a common misconception that when the economy goes south, leads and sales dry up entirely. However, the truth is that even in challenging economic climates, opportunities exist, albeit hidden beneath the surface. This underscores the fundamental role of strategic marketing in unearthing these concealed opportunities
By delving into consumer behavior patterns and closely tracking emerging trends, businesses can position themselves for success amidst adversity. Rather than retreating, we recommend proactive adaptation, which will help you to not only withstand economic turbulence but also discover avenues for growth and expansion.
Strategic marketing's power lies in its ability to decode the nuances of changing consumer preferences and habits. When businesses invest in market research and analysis, they gain valuable insights into what consumers truly need and desire, even when budgets are tight. Armed with this understanding, companies can pivot their strategies, tailor their offerings, and create marketing campaigns that resonate deeply with their target audience. This proactive stance not only maintains a steady flow of leads and sales but also fosters brand loyalty, ensuring long-term resilience in a volatile market landscape.
As business strategist and author Gary Hamel puts it, "Innovation is the only insurance against irrelevance." This resonates strongly in the realm of marketing. Innovating in your marketing efforts can lead to breakthroughs that drive growth, even in challenging economic climates.
Actionable Insights:
“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself." - Peter Drucker, Father of Modern Management
3. Seize Opportunities as Competitors Retreat
Economic downturns often lead to a reduction in market "noise" as competitors cut back on their marketing. This provides an opportunity to capture a larger share of voice and potentially a larger market share.
Numerous case studies highlight the power of maintaining or even increasing marketing investment during economic challenges. Companies like Amazon, Procter & Gamble, and Microsoft have demonstrated that strategic marketing initiatives during economic downturns can lead to substantial gains in market share and revenue.
Amazon, for example, continued to invest heavily in marketing during economic recessions. This approach, rooted in a long-term perspective, contributed significantly to their growth and dominance in the e-commerce space.
Actionable Insights:
Cutting costs might offer short-term relief, but it's crucial to think long-term, especially when it concerns marketing investment. As you embark on your annual business planning for 2024, reflect on the pivotal role marketing plays in driving revenue, profit, and growth.
Stay with us in this series as we delve deeper into crafting the optimal marketing strategy for the coming year and beyond.
About Chief Outsiders:
Jack Bowen and Scott Wright are Fractional Chief Marketing Officers with Chief Outsiders, a national fractional CMO and CSO consulting firm. Bowen is an engaging, roll-up your sleeves leader who draws on 20+ years of C-level marketing leadership and growth experience with significant expertise in data-based, direct-to-customer (B or C) performance-marketing, driving both topline and profitability throughout – acquisition, conversion and sales operations. Wright has decades of executive leadership experience leading B2B and B2C businesses to accelerated growth across numerous industries. He works with CEOs and leadership teams to develop customer-centric strategies for brand differentiation and awareness, effective targeting, lead generation, customer experience, and the repeatable processes and core capabilities that create a foundation for sustainable growth.
Together, they are part of a team of more than 120 seasoned and battle-tested Chief Marketing Officers and Chief Sales Officers who have guided over 1,850 B2B and B2C companies across more than 70 industry verticals.
Chief Outsiders executives have the experience to help businesses quickly figure out how to accelerate growth. They work alongside CEOs as members of the leadership team to develop strategies, build organizational and technical capabilities, and execute marketing and sales initiatives that create growth engines. Contact us today to accelerate your growth. Learn more about Scott Wright here and Jack Bowen here.
Up Next: Dive deeper into understanding your customers and supercharging your 2024 marketing plan with data-driven insights. Article #2 is “Analyze Your Current Customers to Super Charge Your 2024 Marketing Plan.” Stay tuned!
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