With the coronavirus wreaking havoc around the world and businesses that rely on foot traffic shuttered while we adapt to social distancing guidelines, whole swaths of the marketplace have gone dark. In our ever more connected and globalized economy, the ripple effects of this crisis are spreading far and pushing businesses to their limits. Many will not survive, others will have to pivot drastically, and absolutely everyone will need to do more with less and maximize their existing resources.
When purse strings tighten and it’s time to make hard decisions about asset allocation, it’s vital to understand where your marketing spend will do the most good. Business owners and brand managers face a troubling dilemma: you need revenue to afford marketing, but you need marketing to generate revenue.
“After the financial crisis of 2008 ended, it was the companies that kept up their marketing through the recession that came out the other side with their brand value intact and ready to flourish.”
Not marketing is not an option, so lean operations have to make certain that every dollar is having maximum impact. Full omnichannel marketing might not be in the cards when cash flow isn’t where you want it to be, so you need to look at which channels to focus on. Major areas of marketing spend include:
- Digital Campaigns (e.g. websites, pay-per-click, SEO, email, social media)
- Broadcast and Print Ads
- Special Events (e.g. trade shows, conferences, webinars)
- Printed Collateral (e.g. brochures, newsletters, press releases, direct mail)
- Public Relations
There are a number of theories bandied about that claim to help you determine what your marketing budget should be, but ultimately it’s going to be a very personal process. Your budget will depend on your revenue, industry, competition, growth goals, whether you are an established brand or a newcomer, and, of course, the current state of world events. Virtually every major spring trade show, from E3 to SXSW, has been postponed or canceled. Given that stark reality, new focus is being put on digital outreach via social media, virtual reality, and videoconferencing.
Setting A Budget in Tough Times
The first step in planning for rough waters is to take an extremely in-depth look at your balance sheet. The key figure to determine is ‘reliable revenue,’ or the minimum amount of money you take in every month. After subtracting expenses (such as rent, salaries, material costs, etc.) you can calculate the income you have at your disposal to grow your business.
For simplicity’s sake many companies (especially small businesses) opt to merely set a flat dollar amount for their marketing budget. Advanced models tie marketing spend more directly to revenues.
“Some brands will have to pivot drastically, and absolutely everyone will need maximize their existing resources.”
New companies (one to five years old) often spend an extremely high percentage of their revenue (20-50%) on marketing because they don’t have the benefit of an existing customer base or brand awareness to bolster their efforts. They need to be aggressive to get over that initial hurdle. Companies with a longer track record can usually get away with devoting a smaller percentage of revenues to marketing (5-20%).
When considering how to divvy up those funds you should look at the total figure you can play with, your past experiences if you’re an established brand, and perhaps most importantly, which channels your target market is most tuned to. If you want to try moving into a marketing space you’re unfamiliar with, it’s best to set aside funds for testing first.
When you don’t have much money devoted to marketing you should put your focus on engaging and retaining current customers. The idea is to maintain your current market position until revenues pick up, and then return to growth strategies.
Make a Big Impact on Your Customers, Not Your Wallet
Once you have your budget figured out, it’s time to start putting it to work. If the money set aside for marketing isn’t quite as substantial as you would like, you should put that Super Bowl spot you’ve always dreamed of on hold and take a look at the avenues that offer the best bang for the buck such as: small print ads, text-based online ads, social media campaigns, content marketing, and email advertising.
And whatever you choose, move in a stepwise fashion. For example, if you’re going to invest in social media, choose the one or two platforms that your audience reads the most and make headway there before expanding to others.
Also, unless you sell food or vacations or other things that need high-color, high-resolution imagery, direct mail materials can be purchased in cheaper two-color formats, and send by third-class post. Your materials won’t be quite as stylish and will get there a little slower, but you can still accomplish a lot with just the basics – including your most important goal: staying fresh in your customers’ mind.
Use the Right Tools
Retargeting, sending follow up information to internet users that have visited a site you control, is another way to spend marketing dollars wisely because many people “window shop” online, reading product information or filling out a cart, but never complete a transaction.
“Especially now that a global pandemic has both consumers and brands hunkered down and worried about the future, it’s critical that every marketing dollar is put to good use.”
It improves ROI by pointing your communications at individuals that have already shown an interest and might just need a reminder that you’re still out there and ready to serve them, and it costs considerably less than broader campaigns. It also reinforces your brand because you are communicating consistently.
Another tool to look into is outsourcing your marketing needs. Bringing on new in-house personnel means added complexity, onboarding, and salaries, taxes, and benefits to pay. Outside agencies can give you an entire suite of branding experts, designers, copywriters, and all the tools that make them effective, and allows you to quickly scale their contribution up or down as your needs change.
As always, your target market should guide all these decisions. If your main customers are plugged-in Millennials, a digital-heavy marketing mix is called for. Baby Boomers respond particularly well to direct mail. B2B customers shopping for sophisticated products and services expect more personal attention to go over the details of your brand.
Position Yourself to Survive This Crisis… And Thrive When It’s Over
It would be great if you could reach everyone, everywhere, at all times but unless you have a bottomless piggy bank that’s usually not an option. In the real world marketing budgets are tight and smart companies find a way to use creativity, professional expertise, and proven strategies to do more with less. Especially now that a global pandemic has both consumers and brands hunkered down and worried about the future, it’s critical that every marketing dollar is put to good use.
It’s also worth remembering that after the financial crisis of 2008 ended, it was the companies that kept up their marketing through the recession that came out the other side with their brand value intact and ready to flourish.
Want to learn how much further your marketing budget could go? Start today.