Whether you’re an SMB, a multinational or a sole trader, chances are your marketing budget is in the firing line due to the COVID-19 pandemic.
However, in times of crisis, history has favoured the businesses that view marketing as a profit centre over a cost centre; doubling down on retention and acquisition while their competition falters.
Here are five reasons why knee-jerk cuts to your marketing budget can damage your business.
1. You May Forfeit Market Share
While the Great Depression ravaged economies in the 1920s, Kellogg’s faced a familiar choice: to scale back on marketing or pounce on an opportunity. The latter option proved to be a defining moment in the company’s history.
Their category superior, Post, slashed their advertising budget during the downturn, leaving the door open for Kellogg’s to launch their new product, the Rice Krispies. With a heavy push on radio advertising, Kellogg’s drove a 30% increase in revenue and have remained the dominant industry player for decades since.
Remember, in a global crisis such as this, your competitors are in the same boat as you are. This presents an opportunity to capture additional market share while they take their foot off the gas.
2. Stay Front Of Mind
A study by the Institute of Practitioners in Advertising found that when businesses reduced their marketing by 50% for a portion of time during a recession, it then took them almost 3 years to recover the brand equity they forfeited to competitors.
The paper concludes that reducing marketing efforts actually exacerbates the negative impacts of a recession, and is often a symptom of “short-term focus by top management.” So while top-of-funnel campaigns may seem excessive when revenue slides, it’s clear that even brand awareness initiatives can reap great rewards in times of crisis.
3. Take Advantage of Reduced Digital Advertising Rates
During prior economic slumps, savvy marketers have taken advantage of reduced digital advertising rates as competition relaxes across popular platforms. The COVID-19 pandemic is no different, with ad prices across Facebook and Instagram falling a reported 20% in March.
Marketers are also finding bargains in direct-buy ad placements and editorial partnerships, as publishers drop their fees.
4. Invest in Retention
It’s far easier to retain existing customers than it is to gain new ones. If it’s unlikely that your client acquisition will boom during this crisis, consider moving your marketing budget into retention initiatives.
These efforts don’t need to be expensive, just thoughtful. Show gratitude to your loyal customers with discounts, send a personal note to check in with clients, and offer extended service hours if possible.
5. Show Strength
During a financial crisis like COVID-19, staying the course with your marketing can present strength and reliability to your audience. If your prospects see that your business continues to communicate proactively, even when times are tough, you’ll build dependability and trust.
Remember, consistency is one of the most essential elements in building a strong brand.
Adjusting Your Marketing Strategy During COVID-19
It’s clear that investing in marketing throughout an economic crisis can pay dividends in the future. However, that’s not to say that marketers shouldn’t reassess their strategy and adjust accordingly. Here are four basic steps to ensuring your marketing remains effective during COVID-19.
1. Review Your Messaging
It’s essential that your messaging adapts to the context of the pandemic, in order to protect your brand and remain relevant to your clients. Taglines that were once witty may now be insensitive, and promotions that were once attractive may now appear opportunistic.
Consider messaging that is empathetic, appreciative, considerate and kind, and don’t ignore the elephant in the room. Addressing the current climate with honesty can strengthen your brand.
2. Analyse Your Marketing Channels
Of course, budget reductions may be unavoidable for many businesses. If you need to scale back your marketing spend, approach the process with a scalpel, not a flamethrower.
Start by conducting a channel analysis in HubSpot or Google Analytics to zero in on your most profitable marketing activities, and prioritise spending in these areas.
For example, if you require instant cash flow to weather the storm, you might shift some top-of-funnel spending to more conversion-focused activities, like re-marketing or Google text advertising.
3. React to the Economic Climate and Show Goodwill
If you're struggling to manage your cash flow during a financial crisis, chances are your customers are too, and tuning into this reality can reap great rewards for your business.
Many SaaS companies have seen great uplift in their contact base by offering free extended trial periods of their products. For example, Adobe was proactive in demonstrating goodwill by offering students two months of Creative Cloud for free and LinkedIn has removed the paywall on its e-learning courses.
Now may not feel like the right time to step into the deep end and launch something new. However, during the GFC in 2008, Amazon made this bold move by releasing the Kindle, which resulted in a 28% increase in sales throughout the period.
Consumer behaviour has been rocked by this economic event, and businesses that tap into this evolving spending pattern could find unexpected success.
As you can see, history has favoured businesses that remain committed to communicating with their audience throughout thick and thin. This is true for companies large and small; Apple and Microsoft were start-ups during the 1970s recession, along with Disney during the Great Depression.
So while it may be tempting to slash your marketing budget when revenue falters, it’s clear that businesses that continue marketing throughout a financial crisis emerge stronger than competitors who board up the windows.