Brands heading into a likely recession need to plan using data that can quantify the impacts of reducing, maintaining, or even increasing marketing budgets.
Marketers who are under pressure and are hoping for good times are going to be disappointed as 2022 comes to a close. Budgets are under unprecedented pressure, with up to a third of businesses considering making cuts as a result of the markets’ collapse and the cost-of-living crisis, which is really starting to bite.
Marketing budgets are predicted to decrease in all industries, including retail, food, finance, technology, and healthcare. The IPA predicts further cuts to make up for stagnant consumer spending, which makes the outlook for the following four years dire.
When times are tough and CFOs are looking for savings, marketing budgets are infamously low-hanging fruit. However, businesses should be steadfast and take a close look at the data before the financial scythe falls to make sure they don’t act hastily and regret it later.
In other words, no company is an island, and a smart marketer considers all the variables that have affected the past in order to predict what the best course of action will be both now and in the future.
Data is everywhere. Marketers need to dig deeper to protect their budgets and get the most value possible, and the key method for doing this is through data-driven scenario planning.
Here are some crucial actions brands can take now in order to plan for the remainder of this year as well as 2023 and beyond:
Consider marketing to be a business-driver
The first rule of marketing is to not view it as merely a cost because it is a business and growth driver. It can be helpful to reflect on the 2008 global financial crisis. Data demonstrates that maintaining or increasing marketing expenditure also increases return on investment and business impact well after the recession.
Beware results in isolation
When something appears not to be working, it can be tempting to give up after seeing the initial effects. The competitive environment, other economic, political, and social factors, as well as stock market fluctuations, must also be taken into account. Competitor strategies also have an impact on an organization’s marketing budget decisions.
The impact of external factors, such as competition or macroeconomic trends, can be lessened by a thorough measurement program that includes scenario-planning capabilities. It can also offer recommendations on where to redirect funds if necessary. Additionally, it can quantify the effects of cutting, keeping, or even raising budgets.
Also Read: Three Ways B2B Marketers Can Adapt to Lower Marketing Budgets
Invest in the brand to drive performance
In uncertain times, it’s common to see businesses give up on brand marketing in favor of performance marketing. During the pandemic, many retail businesses issued discounts and coupons, which made sense at the time. But over time, brand marketing frequently outperforms performance.
Although performance marketing doesn’t have to be completely abandoned, it is crucial to understand which activities are leading to results because performance frequently depends on the brand to function properly.
For instance, other types of marketing actually drive 30% of paid search clicks. Because of this, brands are advised against using crude metrics like last-click attribution when setting their budgets. The best strategy is always a blend of performance and brand, keeping in mind that marketing teams can only strike the right balance with a clear understanding of what influences successful results.
Also Read: Four Reasons to Use Marketing Automation
Utilize data to speak the board’s language
Marketing professionals can convince management, the board, and other stakeholders that marketing budgets should be protected by using historical data to make future plans.
It is an invaluable tool for any CMO who wants to plan ahead and future-proof their strategy because it offers insight into actual sales, the potential business impact of decisions like budget cuts, and takes all other factors into account as well.
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