Not sure about anyone else, but when I saw the Marketing Week research earlier this week showing that 86% (!!) marketers are delaying their campaigns in response to the Corona crisis, I wasn’t shocked. When times are uncertain or tough, cutting spend makes sense. But is marketing really the right place to cut budget from? 

Obviously, as a marketer, I’m biased. But hear me out. Marketing Week reported that:

• 90% of marketers surveyed said that their budgets are now delayed or under review
• Just 14% are continuing campaigns as usual
• 85% have paused new hires
• 81% are no longer spending on the tech of infrastructure

Sobering stats, to say the least. However, while it’s terrifying for some marketers, for others, it presents a unique opportunity.

A finite window of opportunity.

Kelloggs

Before The Great Depression, Post was the category leader in cereals. However, during the depression, they significantly cut their marketing & advertising budget, whilst Kelloggs doubled its spend, investing heavily in advertising and even introducing a new product (Rice Krispies!). Long story short - Kelloggs’ profits grew by 30% and became the category leader, where it remains almost a century later.

Target

In the 2000 US recession, Target upped its marketing and sales budget by 20%, whilst cutting back in other areas, and as a result, grew sales by 40% and profits by 50% during the recession.

While their rivals were cutting the budget, both Kelloggs and Target understood it gave them a finite window of opportunity to grow their share of voice. With less competition & less noise, the budget that may have given them a 10% share of voice before could now afford them exponentially more.

Increase in share of voice > increase in share of market > increase in revenue

A study by Kantar and BrandZ found that strong brands recovered 9x faster than weaker brands after the 2008 financial crash. Put, determined brands that continue to invest in marketing are more likely to prosper. 

Don’t carry on as usual

You shouldn’t jump the gun and cut your marketing budget. In the same vein, don’t just carry on as usual or quickly switch tactics and plug more money into digital channels. Yes, adapting and being nimble is vital, but the first step is understanding the emerging customer segments. As marketers, we’re used to segmenting according to demographics or lifestyle (mid-twenties, male gym-goers, for example). John Quelch and Katherine E. Jocz recommend that in times of economic crisis, such as a recession, segment by psychological markers instead, “taking into consideration consumers’ emotional reactions to the economic environment”. They identified four main groups of customers. 

• Slam on the breaks
• Pained but patient
• Comfortably well off
• Live for today

Step 1. Understand which group(s) your target customers fall into

Step 2. Analyse how your products/services appeal to them

Step 3. Identify any elements of your proposition and customer journeys that could now be a blocker

Step 4. Adapt

I’ll use one of Rawnet’s clients, Hunters Estate Agents, as an example. Rather than carrying on plugging money into digital marketing or shutting down entirely, they analysed their customer journeys, adapted their home visit valuations to virtual ones, and enjoyed a huge uplift in bookings as a result.

So, is marketing the right place to cut budget from? It’s a resounding no from me. It’s a short term solution that creates a long, hard to return from the future problem. We might not all have the budgets that Kelloggs and Target do, but let’s get creative, keep creating great campaigns and help our companies come out of this stronger.

We want to help companies of all shapes and sizes adapt, so we’re offering consultancy with a Rawnet strategist completely free of charge for anyone who wants it. Whether you want advice on your proposition, customer journeys or digital campaigns, we’re here to help.