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In times of economic downturn, budget cuts and cost-saving measures can be crucial to future success. As a way to do this, companies often tend to reduce staff and scale back production. And many will view marketing and advertising budgets and efforts as superfluous. But they’ve got it all wrong.
“The big mistake many companies make is to slash their marketing budgets when times get tough. It’s a foolish move and a bad decision,” said Gordon Beattie, chairman of Beattie Communications. “If sales are tumbling, a business requires more visibility, not less.”
And visibility boosts consumer awareness. “Share of mind” — marketing that establishes solid consumer awareness of a brand — is more cost-effective and beneficial for the future than suspending marketing efforts now and trying to rebuild later. Advertising while business is thriving and during an economic downturn sustains brand recognition. But beyond this, maintaining marketing and advertising initiatives through a recession can demonstrate the strength and reliability of the brand.
“Companies that curtail their marketing during an economic downturn because they believe no one will be buying what they’re selling are actually jeopardizing their long-term market share,” writes Forward Level Marketing. Cutting advertising and marketing budgets potentially puts an entire company at risk of collapse. Additionally, cuts can stall communication with potential customers, which, in turn, could negatively affect profit. Sales would plunge, and growing the business would be difficult.
Instead, companies should view economic recession as an opportunity to get a leg up on competitors that do ultimately reduce their ad spending. As media prices are lower during such times, spending on marketing and ad placement remains viable and can ultimately increase ROI.
“A marketing budget is an investment,” said Ash Sobhe, CEO of marketing firm R6S, in a piece published by LinkedIn’s “Pulse” blog. He added that such an investment will help companies reach their goals even in tough financial times.
Also, maintaining — or even increasing — the marketing budget can put a company ahead of the competition. When working through a recession, it becomes crucial to take advantage of opportunities that are created by others’ cutbacks. This can ultimately reap amazing results in the long term.
“As other companies cut back their promotional and marketing efforts, you can gain greater visibility and capture a larger portion of the market share,” Sobhe said.
And while experts, including London Business School professor Patrick Barwise, urge companies to maintain such spending, they are also encouraged to do so in more creative ways. Think outside the box with promotions or creative advertising and marketing to spend smarter and engage consumers. This will ultimately boost the company’s prominence in the eyes of new and existing customers, making it a top competitor.
“If your business is going through a tough time,” Beattie said, “cut your costs but not your marketing budget.”READ MORE