Don’t be stupid by cutting marketing budgets

by Tony Fannin, president, BE Branded

I know that in today’s economic environment, most businesses are cutting back in many areas. Unfortunately, the first area to get cut is marketing and advertising. Excuse my French, but “How stupid is that?” Do you really think that telling less people that you exist, what value you bring, or how they can benefit from your company will really help you grow or increase your revenue? Do you really believe that by cutting back on marketing your products/services will increase business? In effect what you are saying is “lets put less gas in the car so we can drive further and save money.”

If you believe that marketing and advertising is not the life blood of your business then, I must say that you don’t know business. Either that or you’re just a commodity, and if you are, I feel sorry for you because you’re on your way to becoming extinct. By cutting your marketing budget, you’re telling your customers that since they know you so well, you don’t need to market to them any more because they’ll buy from you anyway. You are also letting the world know that you have more than enough customers, so don’t bother trying our products. If that’s the case,  you are more superior at business and I should pay you tuition just to learn at your feet.

We’ve all either have heard or have said, “You need to do more with less.” I will agree that there is often fat and inefficiencies that can be cut. But once you’ve gotten rid of all the waste, then you’re cutting into meat and bone. In the end  you’ll be squeezing out any real value your company may have to where if affects your end product. And once that happens, your customers will begin to slip away. Then you begin a harsh cycle of falling revenues and cutting budgets even more, resulting in less people are exposed to your brand, resulting in less revenues, resulting in cutting budgets, and on and on. Financial physics will tell you that you can only cut so much before you start affecting your brand, exposure, and image (or the lack there of). By having the “do more will less” mantra, you are setting your company up for failure. Over time, businesses such as Hardees and products like Sony’s e-reader have felt the pain of the lack of marketing budget. Hardees rested on their reputation for great breakfast. They felt they no longer needed to market or advertise. Surprise, surprise, they went from the U.S. #2 burger chain to almost bankrupt in 3 years. The Sony e-reader was the first and best e-reader in the market. They felt their lead was so substantial, they cut back on their marketing. Surprise, the Kindle came along and kicked its ass. Amazon put a ton of marketing might behind the Kindle launch and it wasn’t long until Sony was playing catch up.

I understand that when the economy gets tight and companies need to conserve capital to make it through the downturns, but come on, cutting marketing budget and STILL expecting growth is down right stupid. How can you expect splashy results when you only dip your toe in the water? Eventually, a competitor will come along, pour marketing might behind their brands and leave you standing still wondering where it all went wrong. The day you begin to cut marketing is the day your competitors make up ground and possibly surpass you. Their continuous marketing efforts will snag your customers because  you don’t exist anymore in their hearts and mind. Out of sight, out of mind and heart. Brands are easily forgotten without consistent reminders that you exist and that you bring value to their lives.

So, I ask all marketers that when you are planning next year’s budget, keep in mind if you’re standing still, you’re already behind.


About Be Branded

Tony Fannin is of President of BE Branded, an integrated marketing firm who helps clients BE Somebody to their customers. If you aren't somebody, then you are commodity.

2 Responses to “Don’t be stupid by cutting marketing budgets”

  1. Studies prove it time and again: businesses that cut their marketing budgets during tough economic times LOSE. You’re right, it doesn’t even make sense to the logical mind.

    Business leaders spend less on marketing if
    1) their marketing is ineffective (let’s face it, most advertising isn’t selling anything) or
    2) they look at marketing as an expense rather than an investment.

    I think it was John Wanamaker that said “I know I waste half of my advertising dollar. The problem is, I don’t know which half.”

    • Donnie– Thank you for taking the time to read our blog and to comment. You’re right in that most advertising doesn’t do a good job. Often, many talented agencies have their hands tied when the client insists on a strategy that they see someone else do even when it doesn’t fit their brand or they are too timid to make a bold stand on behalf of their brand and settle for the “safe”, forgettable route. Your second point about viewing marketing as an expense instead of an investment is exactly right. I believe the reason why many advertisers don’t know which half of their marketing budget is being wasted is because they don’t know what tactics deliver a specific ROI. Not every tactic is measured in dollars and cents. ROI can be determined by other benchmarks and measurements. You have to be specific on what you want to happen. Then, you can decide where to spend your marketing investment. I hope you continue to find this blog helpful and of value to you. I appreciate your participation. Tony

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