Three Reasons Marketing Is the First Budget Cut

Monopoly Money and DiceMarketing budgets are often one of the first budgets cut, time and time again, yet marketers continue to claim companies are making unwise decisions. To support the case, you point to research and cases showing companies who invest in marketing during a downturn come out stronger.

Is the answer turning marketing into a profit center, as some have claimed? For a few companies, particularly those with a direct response marketing model, this might work. But it isn’t the solution in most cases.

The truth is, most companies can temporarily reduce their marketing budget. Here’s why.

1. Your Brand Equity Lives On

Awareness of your company, understanding of your solution and intent to purchase your goods or services don’t just drop to zero, even if you stop ALL marketing.

When marketing budgets are cut, a cumulative benefit from your years of marketing remains.

2. Your Marketing Infrastructure Still Works

Assuming your infrastructure has been maintained over time, your current email solution, marketing automation implementation, community platform and so on are still working.

If you have been putting off much needed investments for years and still have a computer in the back corner running Internet Explorer 5 just to use your outdated tools, all the duct tape fixes may finally disintegrate, but most marketing infrastructure doesn’t need a major overhaul right now just to continue functioning.

Similarly, investments in rebranding or a brand new website can often be delayed as well.

3. Competitive Investments Are a Key Factor

If marketing budgets are being cut back because the economy or a specific sector is struggling, the case is even easier. Marketing is in part a relative activity; when a category cuts marketing spending overall, a reduced investment can deliver the same share of voice in the category.

However, unless other changes dramatically improve the cost effectiveness of your marketing, a reduced marketing budget will take its toll over time.

Your Turn

Hopefully this presents a clear case, but if you are in marketing you likely still disagree. So rather than pointing out the benefits of investing in marketing during a downturn, share your solution: when businesses have already cut out the fat and need to further reduce expenses, where should they look?

Share your suggestion in the comments below or with me on Twitter (@wittlake).

Photo Credit: jDevaun cc

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  • Hi Eric, Wow, thanks for being so bold. I think cutting marketing is a short-term strategy and if you’re looking to grow, you need to make strategic investments in your marketing efforts. However, every company should look at their marketing activities to make sure they’re performing. That’s why measuring marketing activities are so important, as is marketing having a seat at the table so they can align their goals with the goals of the business.

    So, if your marketing still consists of printing a brochure or mailing out branded keychains, then yeah, cut away. But if you’re running marketing like a business and tying marketing’s activities to business outcomes then it should be an area where you strategically invest.

  • Absolutely spot on.

    For years, I’ve been asking Sales Execs in the US and Europe: “what would happen to sales if marketing quit producing anything new for six months?” “Probably nothing,” was the response I get every time.

    Now is that scientific? Of course not. But it points to a multi-faceted dynamic that is worth exploring.

    Your points above regarding why new marketing can be turned off are certainly more finessed (than I’ve ever been) and right on the mark.

    And to Jeanne’s point – yes if marketing activities are aligned to business outcomes – dunno about the rest of you, but I’m still not seeing much of an effective methodology there. B2B Marketing groups (especially in my space of high touch, complex sales) are still producing a whole bunch of stuff the field doesn’t use.

  • I agree with Jeanne that marketing should be an integral part of a business and should be at the centre of any business model.

    However I believe consumer confidence in the business/product/brand will be greatly effected if they see a noticeable decline in marketing activity especially during a difficult period of a recession when confidence should be at utmost importance

  • Chuckle I find the field ( sales) leaves way too many dollars on the table by not following up on leads marketing has brought to the table.

    I have seen it first hand this past month. Delivering over 100 leads and sales was not prepared to handle the volume, so now instead of performing as well as we did, they make excuses for why they do not have time connect with each lead to nurture a sale. Head to desk really, sounds like a time efficiency and process issue to me.

    I had given them heads up on actions to take during the lead generation process, so they could have a leg up with these leads and they again said, they did not have time. Maybe when revenue is down and they get laid off they will have time.

    I will keep producing stellar results for clients – but it is not our job to close the sale. So why again is marketing the first budget cut? It is not performance.

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  • Good insight and perspective!

    But the great Peter Drucker once said that “business has only two basic functions: innovation and marketing.” Companies that do those two things equally well typically succeed (Apple today, for example). Companies that don’t always seem to be in trouble (Apple in the 1990s, or RIM today).

    Just sayin.

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