It’s generally accepted that in periods of economic uncertainty like we are facing this year, most CMOs will likely need to do more with less.
There is still a prevailing perception in boardrooms that marketing is not an investment, but a cost or a tax, putting marketing budgets on the front line when it comes to driving down operational costs and improving the company's performance in the face of reduced revenue and rising costs.
To overcome this perception over the past few years and fueled by marketing automation and big tech, marketers have worked hard to demonstrate a return by focusing on easily measured tactics and show (or maybe give the impression of showing) a return.
If you can measure it, it’s a safe bet, and as budget cuts begin to bite, the pressure to do these easily measurable things becomes even greater.
Short-Term Marketing Temptation
However, these easily measured tactics tend to be short-term, they are campaigns, typically digital, that are designed to flush out revenue for this quarter. You know this quarter, as the CEO shares, is the most important in the company’s history. To help the company push through whatever it is the market has in store for us.
And, of course, this is important, or maybe even essential, depending on your business, but it can come at the expense of longer-term marketing programs like branding and medium to long-term business success.
Related Article: Long-Term vs. Short-Term Marketing: What's Your Crisis Vision?
The Long and Short of It: Healthy Marketing Balance
In the "Long and the Short of It," published in 2013, respected marketing authors and agency leaders Les Binet and Peter Field studied a wide selection of growing companies. They observed these two marketing strategies: immediate campaign activation and long-term brand building. They concluded that the secret to their successful growth, compared with businesses that did not perform so well, was a healthy balance of doing both.
The long-term brand-building supported the short-term campaigns as with some brand awareness, recall and recognition, they would convert more easily.
A quick hat tip to Mark Ritson, brand consultant, former professor and columnist for Marketing Week who turned me on to this through his column on Marketing Week.
A simple example, not from their book, would be running a paid search campaign. If you are in a crowded market then your paid results will appear with four or five others at the top of the search results. Job done? Well, no, what will inspire the potential customer to click on your link, rather than the other four? Maybe some awesome copywriting, but if they recall your brand and trust you, the click is all yours.
So, those long term brand activities, although harder to measure, act as a multiplier on the short-term campaigns, so we need to try and ring-fence some precious budget for those longer-term activities. But that doesn’t help the pressure on the budget, so which of these short-term campaigns has to go?
Well, I have a cautionary tale there.
Marketing Is Cumulative
My chum Robert Rose, chief trouble maker at The Content Advisory, shared a story about a client on my podcast a while back (and I am sharing it here with his permission):
His former client, who is in industrial safety products, sold directly to consumers, and other businesses were doing almost zero marketing. They decided to build a marketing team, hire a bunch of people, get the campaigns going and do all the things; SEO, digital paid ads, PPC, print, PR, some content and email campaigns.
And it worked. At the end of the first year of doing this, they grew remarkably, with a 600% increase in online sales.
The CFO is impressed, wants to understand which of the campaigns and tactics performed and which investments provided a return and asks for an audit. They do a campaign analysis, and each one was flat or slightly underperformed at a campaign level, which for the CFO doesn’t correlate with the increased sales performance.
So, they dig deeper into each department and tactic and ask them to analyze their effort. The analysis showed that they should have grown at 2000%, not 600%, as basically everyone’s attribution model claimed credit for sales. Aside from highlighting the challenge with multi-touch attribution, the CFO concluded that individual campaigns don’t work — but marketing does.
Related Article: The Top Challenges Facing CMOs in 2023
Cut Marketing Campaigns With Caution
Back to the topic of the need to reduce budget. I’ve had a similar and opposite experience, reviewing a newly-acquired company's marketing. They needed to cut some spending, and we made a decision to cut a couple of campaigns that, based on the data we had, was a no-brainer. But once we did it, we observed that it had a detrimental effect on the other campaigns.
Cutting the marketing budget is not simple and needs to be done with care, not just because, as I originally asserted, it’s an investment, not a cost, but attribution is not a perfect science. Yes, we may have moved on from the old Wanamaker quote, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” But do we really have 100% confidence in knowing what is really working (or not)?
More Attention Is Available for Potential Customers
My third defense of holding firm with your marketing budget, particularly if you can keep longer-term brand-building going, is that this conversation is happening in the boardroom of your competitors too.
So while they tighten up, focus on the short-term, more of the attention of your market will be available, and you can grow your share of voice while they quiet down. And as they say, your audience’s attention is like land: they are not making any more of it, so a good time to grab some while it’s free.
And, of course, there are plenty of well-documented examples of great companies who grasped the opportunity of a recession to build great brands, like AirBnB, Slack or WhatsApp.
So, in conclusion, a focus on the short term and quick sugar rush of activity and results, maybe tempting right now, but when we look at what to cut, especially the longer-term branding awareness projects, this could have unforeseen longer-term consequences. Hold firm if you can, or at least resist the temptation of short-term and maintain a balance.
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