24 Mar Increase the marketing budget
If you view Marketing as ‘spend’, cut the budget right now. If you’re clever and see your budget as an ‘investment’, INCREASE your budget.
Let’s be frank, low global growth, low business level confidence, drought and low resource prices coupled with the prospect of being downgraded to junk status all suggests a struggling economy where the risk of a recession is a reality.
And so companies cut their marketing budgets, the predictable knee jerk reaction to tough economic times. But is it the right thing to do?
CEO of Sherpa, Gary Hendrickse, suggests that before cutting the marketing budget, CEO’s and FD’s should be asking a number of questions, amongst others:
- If we actually increased or held our marketing budget while competitors cut back, would that be advantageous to us?
- If we decided to increase our budget or retained current levels, are we presenting the right message in the right places to the right people?
- If we reduced or cut our budget now and lost the equity built over months, how long (and what level of reinvestment?) will it take to restart the effort once the economy plays ball? And then how many others will then mute our voice in the market?
- If we looked at the budget as an ‘investment’ rather than ‘spend’, would we still be cutting it? Because if we viewed the budget as an investment, and less people were marketing, surely we’d pick up more ‘units’ or ‘shares?’
Generally, wise people invest when the market is low, not at its peak. Perhaps there is a lesson in that for marketers. Try making marketing budget decisions based on strategic considerations rather than purely the obligatory cutting of discretionary spend.
“We’re particularly proud of two of our clients. One in Consulting, the other in Shipping. When the economy was at its worst, they were building their brands and marketing aggressively. Both have just reported record performances,” says Gary.