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Earlier this summer when the cost-of-living crisis and rising energy bills were causing justified panic, the UK government launched an initiative that caused some raising of eyebrows.
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The campaign called on businesses to divert marketing spending into instead cutting prices for consumers. The carrot? Those that do so will be able to show off the campaign name and related badge on their websites… and marketing collateral.
For some of the largest firms, this messaging may have carried some clout. Could McDonald’s survive a few months without TV advertising to help ensure that staff wages can be increased, or the rising prices of meat and other products aren’t passed on to customers? More than likely, yes.
But the same advice adopted by a smaller, growing firm could have disastrous consequences. Lead funnels need topping up, especially if demand is starting to falter, and campaigns driving a profitable return on investment should be maintained as much as possible to help steer a business through uncertain economic waters.
To pause revenue growth, as other costs are rising, makes little sense, and that’s before we look at the impact a large-scale pullback in marketing spend would have on the £29.8bn creative and advertising industry here in the UK.
Yet there is an important takeaway for all business owners and marketing directors out there as we head into what will likely be a very difficult winter. Right now is an important time to take stock of all your current marketing efforts, and to decide which areas you should continue focusing on, and in which activities there are potential savings to be made – either to re-invest or to add to a financial business buffer.
Here’s a look at some of the ways you can prioritise marketing budgets during economic uncertainty.
Assess all marketing activities and calculate real-term ROI.
The starting point for any assessment should be to catalogue all current marketing efforts and calculate what returns those individual channels are returning for the business.
Some are easier to calculate than others. Any paid search activity, for example via Google AdWords, it is relatively simple to ascertain how much you’re spending each month, and how much revenue that’s driving – either as a direct sale or the potential value of leads and enquiries generated.
Other marketing areas are slightly trickier to figure out. If you invest heavily in content creation, organic social or traditional PR, then you need to consider the likely upswell in sales attributed to these activities, as well as the management costs associated with them – including dedicated employees or specialist agencies.
Important to note here though is what your medium to long-term goals are. If you have just started investing in organic social or a new channel such as TikTok but are yet to see a direct return, that doesn’t mean you should automatically cull all investment in that area, especially if building a large social following, or giant email database, or mass brand awareness are central to your longer-term strategy.
Diversify and leverage ‘free’ marketing opportunities.
I’ve seen many companies insist that they only want to focus marketing activities on the channels they know are generating a direct ROI. This is fine, but often these channels are susceptible to changes outside of the business’s control that can seriously dent revenues.
For example, a business that was once thriving through organic social will likely have found reach and engagement hard to come by over the last year. And a firm that invests 100% of its marketing budget into AdWords could find that Google updates on the platform, new advertising policies, or a new competitor, can irrevocably damage returns.
Because of this, diversifying your channel focus as well as working to dominate ‘free’ opportunities for revenue growth are so vital – especially during times of economic uncertainty.
Ask yourself this of your business: if your marketing budget was cut in half tomorrow, would you survive? What about if it was reduced 75%, or even pulled entirely?
This question will induce anxiety pangs in the stomachs of marketing directors who have put all their eggs in Meta or Google AdWords’ baskets. But the companies who have invested in growing organic SEO rankings, built large email databases and engaged social communities will be a little more confident that they could ride out a purge of their budgets and still drive results.
So take stock of where your marketing efforts are currently focused. If you’re relying fully on paid clicks, then now would be a good time to consider your search engine rankings, what your content strategy looks like, how you’re nurturing and upselling, and whether that email data list needs some more attention.
Focus on your core audiences.
I tend to split digital marketing activities into two core targeting areas: primed-to-buy, and prospecting.
A primed-to-buy audience will be one that is directly researching a product or service, such as ‘task management software’. A prospecting campaign would look to educate an audience as to the benefit and existence of the product or service you offer, such as ‘how to better manage my time at work’.
The former tends to offer the most profitable returns. The customer is already searching for what it is you’re offering, and all you need to do is place your brand in front of them when they’re on their way to making a buying decision.
Prospecting campaigns are great for driving initial brand and product awareness, especially when that product or service is completely new. But these campaigns will, most of the time, cost a lot more to drive results and deliver a worse ROI.
Why this matters during a conversation about tightening marketing belts is that where you decide to trim budgets is important. If you want to cut 25% from your marketing spend, doing so across all marketing efforts and audiences is the wrong way to go about it.
Instead, look to trim spend from those campaigns targeting audiences who are less likely to make an instant buying decision. This is especially true if your existing marketing budget isn’t enough to capture all of the immediate market demand available for people who are primed to buy right now!
You can go even further with this to further help boost ROAS too. Take a look in your Google Analytics or AdWords accounts at the demographic data. Which age brackets convert the best, and spend the most? Where do they live? What devices are they using?
Tailoring spend to really hone in on the prospects most likely to buy and at the lowest CPA is a great place to start in trimming spend, or ring-fencing marketing activities that should always be left running.
Assess how your marketing is managed.
The last point for this piece is to consider how your marketing output is managed, and the relationships you have with marketing and advertising suppliers.
A survey in 2019 found that around four in 10 UK businesses outsource their marketing output to specialist agencies, whilst the rest in-house their efforts in one way or another (either with a small team, dedicated departments or an often-overworked sole founder!).
This split highlights an interesting dilemma when it comes to businesses that are investing in marketing, but need to tighten their belts: should you bring marketing efforts back in-house and move away from an agency?
The answer to this is complex. It depends on the results that any agency partner is generating. Are they profitable? Are they generating a better ROAS than the agency before them? Do you have an open and honest relationship? Or, have results stagnated with little suggestion as to how they could be improved, or results generated to date aren’t covering their own fees?
If you were to break off the relationship with an agency partner, there are risks attached. Do you have the in-house time or capability to proficiently manage the work? If results faltered, how detrimental would that be against any management fee saving from doing it yourself? Would you have to hire someone to do the work, and would their salary be any cheaper than an agency’s management fee?
The reverse consideration is also true for businesses that currently in-house a lot or all of their marketing activity. It may be that by trying to manage marketing efforts within your existing team could be limiting results, especially in specialist areas such as paid search and social, or search engine optimisation.
Knowing when to hire a marketing agency or specialist freelancer is just as important when it comes to getting the most out of your current marketing spend. Bringing fresh ideas into your business, and tapping into the specialisms of a group of experts for the cost of one monthly retainer, rather than relying on a few marketing and creative heads within your organisation to successfully manage all aspects of your output.
Times are tough, but great businesses will out.
In summary, it’s important that business leaders decide for themselves how and where to spend their marketing pounds and dollars. Pulling all spend overnight in a bid to save money is a potentially fatal play. But understanding where investment is being made, what returns that spend is generating, analysing who your most profitable audiences are, and considering how marketing activities are managed, are all healthy things to be tracking and contemplating – whether world economies are thriving or diving.
