Don't slash marketing budgets in belt tightening conditions

Marketing is a long-term investment in brand equity. Why would any company that has taken years to develop its brand, and ploughed millions into building up its equity, destroy it for a temporary recessionary period?

Now is the best time to maintain or increase your marketing budget to take market share from your competitors.

Last area to get the chop

If thought through strategically, it should be the last area of the business to get the chop. The reason it seems like good business sense is because it is the biggest expense to any business. Marketing efforts are also hard to measure and the return on investment is not evident short-term. In reverse, it also takes longer to see the disastrous effect of market absence.

Bottom line: slash the budget and your company will ultimately become less competitive. It may boost your short-term cash flow, but long-term you will lose market share.”

Unfortunately, executives are still not viewing marketing as a strategic imperative in the business, but rather as a tactical effort, synonymous with just advertising. There is often no link made between the overall business strategy and the marketing strategy making it difficult for executives to appreciate how much marketing impacts on the bottom line. In my experience there is a dotted line between the two. - meaning marketing is closely linked to defining what the business is about, what it stands for and how it's going to operate. It is a delicate combination of art and science.

Rare species

Let's face it, the traditional marketing manager, whose expertise encompasses all areas of a marketing strategy across all four Ps of the marketing mix (price, promotion, product and place), is a rare species today. Many are employed to just interface with advertising agencies which means they are only proficient in the one of the Ps - promotion. So when their budget rises to the top of the cost-cutting agenda, they find it difficult to defend their spend.

Instead of randomly cutting marketing budgets, it would be wiser for executives to focus on investing in activities that will build and sustain long-term brand equity. This begins by conducting a thorough brand investigation to assess where they are currently over or under spending in line with their business objectives. This diligence exercise will reveal the need to re-allocate or increase the budget to those initiatives that will yield a greater return leaving no reason to cut back.

My advice for company directors/owners is to always view the marketing budget as an investment and not as an expense and, like all investments, it will yield a good return in the long term.

There is enough evidence to prove that maintaining adspend in tough economic times will result in market share gains that pay off when the economy improves, but how many businesses are brave enough to act on it?