If you have ever had ownership of the marketing budget in a small, medium or large organisation, I’m sure you have felt the pressure that arises during tough economic times. It seems to be that one of the first operating expenses that comes under the microscope is the marketing budget.
Of course there are other budgetary items that get scrutinised, but it still amazes me that many businesses treat marketing as a discretionary spend. I can only assume this is because they don’t understand the benefits of marketing, or they’re doing it wrong!
From my perspective when times are tough and you are fighting for a bigger slice of a customers diminishing available spend it is the exact time when you need to ramp up your marketing efforts. It is hard to understand how reducing the visibility or awareness of your brand and the benefits of your offer can help arrest declining sales or claim market share in a competitive environment.
Another reason behind many businesses challenging the marketing budget when the pressure is on to reduce costs is because management and the finance department are unable to see the return on their marketing spend.
For finance people it is incongruent to spend more money when the business financials are telling them to reduce costs. This being the case every marketer needs to be able to calculate Return on investment (or ROI) – even more so when the bean counters come a knocking.
But, ramping up your marketing efforts does not always correlate with an increase in marketing spend, but it does mean increasing your frequency, impact and the creativity of your marketing campaigns.
To be honest, a good marketer should already be analysing their marketing spend and know intuitively if not specifically the financial return of each and every campaign, as well as being able to quantify the benefits of above the line advertising and branding initiatives. Only from this point can you defend your marketing budget.
Monitoring ROI should be happening in good or bad times – otherwise how do you know what is working best? And it is worth noting that customer purchasing behaviours will change significantly with variations in the economic climate – be they personal, domestic or global. Marketers need to be responsive and agile to make the most of market conditions and changes in customer behaviours – and don’t forget the competition!
If you have not developed appropriate marketing attribution models or are not applying robust campaign analytics, I suggest you start exploring your options. Not only will it ensure you reinforce the importance and benefits of a good marketing strategy – it will contribute significantly to the success of your business.
