skip to Main Content
Why your marketing budget should be the last thing you cut
Marketing your way
out of a recession

Recession and economic downturn? This is a marketing opportunity! In such unsure times the natural reaction is to make further controls on costs. And if you’re looking at cutting variables, you’re most likely looking at the easiest thing to slash – marketing. If you do decide to make marketing the casualty of choice, you’re ignoring the considerable bank of evidence from past downturns: those who maintain their “share of voice” during a recession are far more likely to come out on top when growth picks up.

You may have a board to convince of this argument, or you may just want to convince yourself. But before you cut marketing, prove its worth by taking at least some of these steps:

Embrace the idea that marketing and advertising is perhaps the fundamental way to improve shareholder value.

By definition this requires adopting a long-term not short-term strategy, because that is exactly what the analysts do when assessing any company’s performance. Cutting marketing investment today is quite likely to have an immediate and positive effect on the bottom line, but will certainly undermine your brand share and profits over the longer term. Analysts understand this, and so should marketers and their fellow board directors.

Do not confuse discounting, either to the end-consumer or to the retail trade, with brand building and marketing.

Too often they are considered as interchangeable. In reality the huge sums spent on discounting (often over 60% of total marketing efforts) are more likely to destroy than to build brand equity and shareholder value.

Understand the macro-drivers of your business.

Spend time (and money) to investigate thoroughly the relative importance and effect of variables such as pricing, advertising, distribution, the economy, the weather and competitive activity. A greater understanding is essential if you are to weigh up the relative benefits of different possible actions, let alone to build an accurate shareholder value model to help determine the longer-term effects of the alternatives. This understanding can only be obtained through rigorous econometric modelling work, which will provide for you values of pricing and advertising elasticities, to feed into your shareholder value model.

Make better use of customer data in your marketing efforts.

Most companies have stacks of unused customer data from different sources such as returned warranty cards, coupons, the internet or proprietary surveys. This data can reveal your most valuable customers. It might be possible to trade them up to build greater lifetime value.

Better use of such data can help to segment your target consumers.

In a tough economy you do not want to waste your valuable marketing investment. You need to target it precisely where it is likely to generate greatest return. Think about re-orientating your advertising effort out of broadscale mass media into more appropriately targeted vehicles.

Adopt a truly holistic approach to marketing communications planning.

Instead of the traditional approach of starting with a creative idea, the holistic approach starts with the brand and the consumer. Understand the consumer and how he/she relates to the world, and in particular all forms of media, and you find the best combination of ways to communicate most relevantly and effectively. You must empower your media specialist agency to develop an objective communications strategy, unencumbered by any pre-disposition towards any particular medium. The result should be an effective and appropriate plan, below and through-the-line.

Embrace interactive media of all kinds (not just the high-tech variety).

One-to-one communications give you the ability to target more accurately, to be totally accountable and to build the loyalty of your best customers. Remember, the digital interactive media are increasingly becoming the primary means of reaching the discerning younger generation.

Finally, invest just a small part of your total marketing funds into ongoing effectiveness measurement.

Some form of tracking study will allow you to understand better which pieces of your total effort are producing the greatest effect, and will provide the very basis of your shareholder value analysis. Without that, you will not fully appreciate why it is so crucial to maintain your marketing investment right through any downturn in the economy.



Fyrmästaregången 4
413 18 Göteborg


+46 31 703 00 00
+46 706 72 22 21



Back To Top