If you’re like most business owners, you’ve been reading the economic tea leaves to figure out how you should strategically adapt for the next few months and years. Inflation is high, the supply chain is still shaken up from the COVID-19 pandemic, and consumers are starting to worry; while there are some positive economic indicators in play, most people are exercising caution and planning conservatively, reducing spending in these uncertain economic times.
Understandably, one of the first areas to receive budget cuts in a business is marketing. Marketing isn’t considered integral to central operations, since it’s an indirect source of revenue generation dependent on operations throughout the rest of the company.
I’d argue that marketing is practically necessary, even in the hardest economic times. Without a way to build brand equity, raise awareness, and drive new customers to your business, a moderate economic challenge could become an insurmountable problem.
That said, reducing your marketing budget could be a smart move – as long as you plan appropriately.
Here’s how to do it.
Three Golden Rules for Cutting Your Marketing Budget
If I had to boil everything down to three main rules, it’s these:
- Use empirical evidence. Even the best business owners sometimes suffer from emotional decision making. If your business is struggling, your investments are declining in value, and you’re not sure how the next several months are going to play out, it’s tempting to go on a massive cleaning spree, reducing or eliminating your budgets indiscriminately or based on your gut feelings. Instead, you need to commit to making decisions based on empirical evidence and objective reasoning.
- Focus on strategic value. Reducing your marketing budget could be a good strategic move as long as you’re focused on strategic value. As a simple example, it’s better to spend $10,000 on highly effective marketing materials than $25,000 on moderately effective materials. You may not drive as many customers this way, and you may not have as much visibility, but dollar for dollar, you’ll make more of an impact. We’ll explore some specific ways to do that in the next section.
- Maximize efficiency. Finally, you’ll want to focus on efficiency. It’s not just about spending less; it’s also about making sure every dollar you spend is working as hard as possible to achieve your goals. Is there a way to reduce spending while simultaneously getting more productive marketing work done?
Key Strategies for Managing Marketing Budget Cuts
With these rules in mind, the following strategies can help you make the most of this economically uncertain era – and keep seeing great results on even a thin budget.
- Tap into the power of email marketing. There are many highly cost-efficient strategies to choose from in the marketing world, but there are few as potentially lucrative as email marketing. For many years, email marketing has been one of the highest-ROI strategies in the industry thanks to its low startup costs, easy management, and propensity to be automated. Each year, we get more and better tools for managing email lists and sending better messages to our target audiences. In other words, this should be a staple strategy in your arsenal – and it won’t cost you much to maintain it.
- Lean on automation. For email marketing and dozens of other marketing strategies, automate as much as you can. Automation reduces the need for human labor and increases your consistency, allowing you to greatly expand your marketing efforts without requiring more spending. Just make sure your automation efforts don’t rob your messages of their personality and humanity.
- Rely on agencies and freelancers. If you have an in-house marketing team, and you’re struggling to make ends meet, you may have to make some difficult cuts. For many businesses, it’s more cost efficient to rely on agencies and freelancers; employees are associated with a host of different expenses, while costs are more straightforward for these third parties.
- Cut (or pause) strategies that don’t provide immediate value. Under ordinary circumstances, long-term plays can be very powerful; spending years developing your SEO strategy can pay off in spades. But if you’re currently in a tough economic position, or if you anticipate being in one in the near future, it’s better to optimize your marketing portfolio with strategies that provide immediate value, like placing PPC ads.
- Target your audience more specifically. Any marketer worth his salt knows the audience targeting is a key to success. The more specifically you target, the more relevant your messaging becomes – and the less competition you have to deal with. If you’re reducing your spending, it’s important to target your audience even more specifically, fine-tuning your target demographics and potentially targeting only people within one specific section of your sales funnel.
- Experiment in faster cycles. Successful marketing requires ongoing experimentation, allowing you to tinker with various variables to see what works best for your audience. If you don’t have much money to spend, you need to experiment in much faster cycles, so you can eliminate waste faster – and double down on your most promising new strategies.
An economic recession is no excuse to close your marketing department, but it makes sense to reduce your budget if you do it intelligently. Focusing on strategic efficiency and maximizing value can help you extract much better results even from the tiniest amounts of spending. You can always scale back up in the future.
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