Who’s on the chopping block? In business when times are tough, or even during an economic downturn, companies often look for areas they can trim from the budget. One of the departments where leaders often strike first is marketing. This may seem like a logical choice because most businesses can still deliver their offerings while marketing efforts slow to a drip. The problem is that cutting marketing when business slows has been proven to reduce leads, slow sales, and lengthen any recovery.
While researchers have studied economic slowdowns dating back more than 125 years, there is no need to look past our most recent experience with the Great Recession of 2008. During that time a growing online bookstore decided to keep innovating, expanding, and increasing its marketing budget. By doing so, Amazon – which had only posted its first profit a few years earlier – went on to become one of the largest companies in the world.
“It is well documented that brands that increase [marketing] during a recession, when competitors are cutting back, can improve market share, and return on investment at a lower cost than during good economic times,” says John A. Quelch, a professor at Harvard Business School.
Study after study has shown that marketing and PR can grow your business when times are tough.
Should we pull back on marketing during a slowdown?
While often not the core competency for a B2B company, marketing is essential to generating leads and sales. In fact, when a company cuts marketing, the resulting decrease in sales more than offsets any money saved via cuts. However, because cutting marketing budgets during a slowdown is based more on fear than on facts, most companies still take a bite out of the budget.
McGraw-Hill wrote a paper about the recession of 1985. It found that companies that either maintained or increased their marketing budgets during that time experienced a 256% increase in sales versus companies that decided to make cuts.
There is additional evidence as well dating back to the Great Depression. At the time, the Ford Motor Company dominated the industry. Yet, with all the uncertainty the company’s leadership had to make a tough decision. In what is now taught in business schools around the globe, Ford chose to halt almost all their advertising, PR, and promotions. The results are still felt throughout the automotive industry almost a hundred years later.
Not marketing to save money is like stopping your watch to save time
Ford’s bottom line flipped from making $40 million in profits in 1930 to being $88 million in debt by 1932-33. On the surface, it could be argued that the losses stemmed from the economic collapse. However, General Motors provides proof that the sudden flip from profitability to insolvency is more likely attributed to Ford’s poor marketing decision.
As Ford vanished from billboards, radio spots, and print advertising, GM decided to go against the grain. It invested exponentially in advertising and public relations. Before the decade of the 1940s had ended, GM had overtaken Ford as the largest auto manufacturer in the world. Just a few years later it was responsible for selling almost half the cars in America.
As a popular maxim says, “When times are good you should advertise. When times are bad you must advertise.”
Coincidentally, Henry Ford – who retired before the beginning of the great depression – once said, “Stopping advertising to save money is like stopping your watch to save time.”
What should you prioritize instead of cutting marketing when business slows?
While the case for keeping the marketing budget intact is clear, there is an argument to be made about where that budget is best utilized. The key for any marketing department, during both prosperous and slow times, should be to determine what marketing tactics generate the biggest bang for your marketing buck.
During the Great Depression GM focused heavily on advertising to hit their ideal customers. However, that may not be the best approach for B2Bs today. While the ideal customers are still reading industry trade publications, it can be quite expensive to try and reach enough prospects through advertising. For example, a single-page ad that runs in one publication may cost $10,000-20,000 per month. If you were looking to hit multiple publications your spend would quickly increase.
However, there is still “gold in them, there hills”! To say it another way, there is an incredible amount of value in being seen in trade publications. In fact, a recent study by MediaGrowth showed that more than 92% of decision-makers report regularly reading industry publications. More impressive is that 97% of those people said that what they read directly impacts purchasing decisions.
Ads are one way to get in front of those decision-makers. Yet, the content between the ads is arguably even more impactful. That is why generating insightful, educational, and even industry-disruptive articles that regularly get published in the journals that target your audience is the holy grail of B2B marketing.
B2B PR: economical and effective
PR is often thought of as generating press releases that announce company news or awards. However, a much better approach is utilizing the media to help tell your stories. Rankin PR has created a niche within industrial PR and B2B technology public relations, writing content for industrial and technology trade publications. In doing so, we are able to control the narrative and educate your target audience.
There are numerous pathways for successful storytelling through great PR content. This could include third-party, testimonial-supported feature articles. These articles about your success stories do not use advertising language to sell. Instead, they inform and educate your prospects about how you solve problems for your customers. Essentially, it’s word-of-mouth marketing where your customers do the talking for you. Instead of, “buy this product,” you simply offer up the facts and let the reader decide.
Another great tactic is the use of the experts within your business to pass along free advice. They can answer questions or explain coming industry trends in what is known as thought leadership articles. These articles are not self-promotional, but the end result is a huge boost in company awareness and credibility.
Securing a larger share of voice
Additionally, these articles keep you “top of mind” with your potential customers. People have a short memory when it comes to B2B products and services. However, when a purchasing decision comes up, you need to be recalled and included on that list of potential vendors. By showing up in print publications, in online articles, and even populating the top spots on a search engine results page, your prospects can’t help but remember you.
So, while others start cutting marketing when business slows you can create a larger share of the pie in the minds of your prospects. This can lead to increased sales, shorter sales cycles, and increased revenue.
Additionally, remaining in the limelight conveys to your target audience that you are at least stable. Of course, the perception could also make it seem like you are thriving during these challenging times.
As Burberry CEO and former Apple SVP, Angela Ahrendts, said, “Never waste a good recession.”
Want to learn more about our content marketing services?
