When the going gets tough, companies might be tempted to skimp on their marketing – but there are better ways to proceed, says Barbara Stöttinger of WU Executive Academy
Whenever the economy is struggling, many companies get jittery and hit the brakes in terms of spending. Fair enough. But marketing especially is an area that often experiences instantaneous, and sometimes massive, budget cuts.
In our BANI (brittle, anxious, non-linear, and incomprehensible) world, this is not only short-sighted but definitely the wrong thing to do. A better way to proceed is to do away with old habits and, at the same time, find the right mix of targeted cuts and smart reinvestments in activities that generate a direct ROI. Rampant inflation, rocketing energy prices, political instability, thrifty consumers: as soon as the cost pressure within a company is on the rise, everyone starts to scramble for ways to save money.
Something that we observe time and again is short-on-cash companies starting to make knee-jerk cost cuts in areas that, at first glance, don’t deliver a direct ROI. And marketing expenses are right at the top of that list. I consider this short-sighted and even dangerous because this strategy has been known to backfire and cause serious long-term consequences.
Efficient savings and clever reinvestments
Instead of bringing out the big guns and cutting a certain percentage of the budget across all channels, a new approach would be smarter: saving in a targeted way in areas where there is inefficiency and, probably, overspending, and reinvesting in areas that promise more potential for a long-term ROI. And this is exactly where the creativity, skills and long-term vision of the marketing department is needed. It will increase a company’s resilience in difficult times and bring about the necessary growth mindset.
Instead of cost-cutting, clever investments can pay off in times of crises, as the example of United Airlines shows: much to the surprise of its competitors, the US airline launched its biggest ad campaign to date during the pandemic, of all times. But this unusual approach paid off: in the past two years, United has managed to significantly increase the number of passengers compared to other airlines. Indeed, as Henry Ford once said: “A man who stops advertising to save money is like a man who stops a clock to save time.” A quote that is more pertinent than ever in times like these.
Crisis-proof marketing: A how-to for business practitioners
So, what is it that marketing executives can do exactly? Here is an overview of the most salient tips and tricks for the first steps towards successful marketing in times of turmoil:
Analyse your point of departure
Instead of randomly cutting costs across the board, marketing executives should look into the details to get a comprehensive overview: how much is spent on which activities on which channels, in which media, market segments, and geographical areas, and how efficient are these activities? This information allows us to identify inefficient spending in order to either reallocate funds towards better-performing marketing channels with a high potential for growth, or to log them as potential savings.
Set a target and make a plan
Now it is all about emphasising the particular contribution to a company’s overall success that marketing brings to the table. Come to terms with the management on how to measure this contribution. It’s important not to define investments in marketing as (additional) costs but as a business case: marketing can be the key to long-term success, especially in times of crises. Make sure to also define your top priorities as well as the strategies and tactics you will use to achieve them. Which specific steps do you have to take in order to reach your goals? Do you have all the data you need to answer this question? And do you have people with the necessary skills in your team to extract and analyse these data and draw the right conclusions?
In-house lobbying
If you want your plan to succeed, you will need to win over the entire managing staff. Especially the CEO and the CFO need to be caught up on your priorities, pledge their support, and keep their promises also as the year goes on. Better inside representation is called for: what is it that we at marketing do, and what are the benefits? Provide your colleagues with regular updates and all the information they need to understand which marketing measures work well and how they contribute to the company’s success.
Go for full-funnel marketing
Traditionally, marketing consists of separate areas: brand building, for instance through TV commercials, and performance marketing as it is used to measure online activities. A lack of coordination between these two areas can have negative consequences as marketing departments focus too much on one activity and neglect the other. Best-case scenario: the activities remain uncoordinated, negatively impacting the ROI. Worst-case scenario: turf wars between the two factions cause budget and performance decisions that are not based on facts any more.
This is why full-funnel marketing is the future, considering performance across the entire funnel, i.e., from TOF to MOF and BOF. This allows us to combine the strengths of brand building and performance marketing through linked-up teams, measuring systems, and KPI in order to generate better results than any approach that focuses solely on performance channels.
Foster creativity within your team
Despite all technological progress, marketing continues to rely on creativity – and especially when times are tough, human creativity becomes particularly important. It is about telling a story and tugging at people’s heartstrings. The ability to do so will continue to play a vital role in the future. This is why you should always be on the lookout for creative minds to strengthen your team.
Be open to new technological trends
Today, technology is an integral part of modern marketing. For many companies, investing in marketing technology has become an essential part of their strategy, which is good. However, we often see significant investments in these technologies underutilised due to lack of expertise or integration challenges. Marketing professionals should ask themselves whether they’re leveraging the automated creative capabilities they’re paying for. To unlock the best value, companies must take an end-to-end view of their investment, focusing not just on the marketing or ad tech implementation but also on the adoption, usage, and impact from it.
Therefore, it is a good idea to draw inspiration from the best practices and benchmarks of other industries. A recent example would be commerce media marketing, which integrates sales and advertisement to create a seamless experience for the final consumer. It combines elements of e-commerce (online sales of goods or services) and media marketing (use of various media channels to promote products or brands). Commerce marketing allows marketing experts to tie advertisement costs directly to customer purchases, improve target group appeal, and gain better insights into the target group.
About the Author
Barbara Stöttinger is the Dean of the WU Executive Academy – the business school of the Vienna University of Economics and Business (WU).
