During hard times, the natural instinct is to go into survival mode and cut back on spending wherever you can. But cutting back investment in marketing could be a big mistake.
Unless you’ve been hiding under a rock for the last 12 months, you’ll know that we’re currently going through some pretty tough times.
Most business owners I’ve met since the start of the coronavirus pandemic agree with the general view that this is, indeed, “unprecedented” and unlike anything any of us have ever experienced.
For many (although not all), business is harder to come by and profitability is down.
In the hard times, the natural instinct is to go into survival mode and cut back on spending wherever you can.
And one of the areas that usually finds itself right at the top of the list of cut-backs is marketing.
But cutting back on your marketing investment could be a big mistake.
Equally, bucking the trend and increasing your marketing spend right now could be the best decision you ever made.
Why you shouldn’t cut your investment in marketing
If you’re brave, and prepared to take a longer-term view, a recession or economic downturn can actually be an ideal time to increase your marketing spend.
There’s plenty of data available to support the reasons why, but for now, let’s focus on just three:
1. You’ll get ahead of your competitors, who are probably cutting back
Based on the assumption that most businesses reduce their marketing investment during a recession, this is your chance to get ahead of the pack.
As someone else said – “Think about it; if two people are talking to you, and one stops and leaves the room, you’re only going to listen to the one who stays and carries on talking.”
By the same token, a brand that’s judged to be on the decline because it’s gone quiet can very quickly see the effect as word-of-mouth spreads and the perception of failure increases.
History is full of examples of businesses that stuck to their guns coming out ahead of (often bigger) rivals who cut back:
In the 1920s, when cereal rivals Post (who?) cut back significantly on its advertising budget, Kellogg’s doubled its own spend, investing heavily in radio and introducing Rice Krispies and our friends Snap, Crackle and Pop. Kellogg’s profits grew by 30% and they became the industry leader and never looked back.
In 1973, during the energy crisis in the US, Toyota resisted the temptation to drop their marketing budget and decided to stick to its long-term strategy. By 1976, Toyota had overtaken (so to speak) VW as the top imported car maker in the states.
In the recession of 1990-91, Pizza Hut and Taco Bell pounced when McDonalds decided to cut its marketing spend. Pizza Hut’s sales increased 61%, and Taco Bell’s went up by 40%.
And McDonalds? Declined by 28%.
2. You’ll stand out from your competition
When customers’ business becomes harder to win, the companies that succeed are the ones that stand out from the crowd.
If you cut back on your marketing, it reduces your brand profile and your online presence dwindles, leaving the door open for braver, more forward-thinking competitors to take advantage.
If, on the other hand, you can remain focused on what sets you apart from everyone else, and keep telling the story of why you’re different, you’ll get noticed and remembered – and importantly, by the right people.
When your customers do gain back the money to spend, they’ll instinctively buy from brands that have stayed top of mind.
Historically, businesses that cut their marketing spend completely in the first year of a downturn, took FIVE YEARS to recover.
3. You’ll be more profitable
When times are tough, it’s tempting to widen the net and take on customers or businesses you wouldn’t normally want.
Usually, it’ll be something outside your core discipline – something you might be able to do, but not particularly well. Or you might simply start dropping your prices to win business.
Either way, your profitability’s going to be affected. You’ll make no money if you’re just a busy fool.
So don’t give up on your marketing when things are hard. It’s the perfect time to take advantage.
But if money’s tight, what can you do to get the most from your investment?
This blog post as part of a longer article called Marketing in a Downturn – How To Make the Most of the Weapons At Your Disposal, which includes 5 top tips for how you can improve your marketing, right now, without spending big bucks.
Need some help?
Tomango helps small businesses get more of the customers they want by helping them create the right image for their brand and building a dominant online presence.
We know running a small business is hard and that occasionally time, money and expertise can be in short supply.
If you’d like some help putting some of these ideas into place, give us a call on 01273 814019 or email hello@tomango.co.uk.