Today, we chronicle something then never changes: cuts to the marketing budget during tough times.
Marketing is integral to a brand’s success, from top-line programmes aimed at priming the brand to pure, downstream demand generation. Yet, when things in the market get tough, marketing is the first department to feel the pinch of budget cuts.
Although it is logical for marketing spend to contract when demand contracts, marketing is often given arbitrary targets to meet as part of broader cost reduction programmes. Today I will propose different, more effective principles, and a few actions to bring them to life.
Focus on: The Investor CMO
I think CFOs often fail to see the value of marketing because CMOs are not adopting an investor mindset, often resorting to banal linear cuts across the board to meet the new budget. The investor CMO is different: they selectively prune unproductive costs and invest part of the savings in the future. Let’s see how:
Streamlining Growth with a CFO Mindset in Marketing Spend: The necessity for efficacy and frugality in marketing investments becomes even more pressing during economic downturns. To cope with these pressures, CMOs need to have a comprehensive understanding of their marketing investments and their commercial implications. Identifying areas of fat within the marketing budget and redirecting these resources towards targeted growth pockets is crucial. To reach this level of understanding, an in-depth analysis of marketing spend across various channels, media types, market segments, and regions is required. The aim is to root out “bad revenue” - spending that does not yield enough margin to justify the investment. Refocusing these funds towards more efficient marketing channels or contributing them to bottom-line savings can help optimize your marketing budget. Examples of such optimizations can be found in companies that have revisited their marketing supply chain and agency model, resulting in significant savings.
Optimizing Current Resources: Uncertain times often necessitate innovative strategies to safeguard and stretch marketing budgets. This implies focusing on ROI and value creation, leading to a reevaluation of where and how marketing investments are made. Best-in-class companies unlock significant growth by rethinking their strategies in these areas. Embracing speed and responsiveness is crucial in a changing economic landscape, which is why establishing a marketing “win room” can be beneficial. A cross-functional team, operating in biweekly sprints, can keep up with changing customer behaviour and make rapid adjustments as needed. Furthermore, becoming smarter about tech investments is vital. This includes not only implementing new marketing technologies but also ensuring they are fully utilized and integrated into the existing marketing infrastructure.
Investing in Next-Generation Growth Drivers: CMOs can make a significant impact by fundamentally rethinking their marketing and value creation strategy. This often entails a dramatic reallocation of investments and the exploration of new, innovative approaches. A key strategy is to embrace “full-funnel marketing”. Instead of focusing solely on the bottom of the funnel - customer acquisition and loyalty - companies should aim to increase customer awareness at the top of the funnel for longer-term growth. This holistic approach captures both existing demand and creates new demand, linking brand outcomes with commercial outcomes.
Four Actions for Growth in a Recession
There are four practical actions to follow to put the above principles in motion, let’s dig in:
Evaluate: Swiftly evaluate your organization and teams’ position in relation to the three investor mindset principles: fueling growth, maximizing current resources, and investing in future profit generators. Identify where the greatest growth opportunities lie. Ascertain which areas sync well with your current skills and company strategy, and highlight priority areas where you either match your competitors or surpass them.
Set Goals: Assert the impact of marketing on your business in a language that resonates with your CFO. Agree on a shared understanding of marketing-driven revenue and the method to measure it, and pledge to it collaboratively. View the marketing investment not merely as a business expense, but as a business case that necessitates justification.
Plan: Explicitly outline your chief priorities and the strategies and tactics to achieve them. What will it necessitate to accomplish your goals in your specific context? For numerous marketers, this could mean not just reevaluating the initiatives, but also the human resources and skills required for success. A significant percentage of CMOs from our December survey indicated marketing data and analytics as a crucial gap in achieving their goals. A deficiency in contemporary marketing competencies such as fluency in marketing technology, measurement skills, excellence in digital channels, and full-funnel proficiency can be a hindrance for many companies.
Act: Secure the commitment of the executive team and mobilize your team. The need for CEO and CFO alignment on priority areas and the necessary support and collaborations to accomplish them is more critical than ever this year. Now more than ever, the CMO will need to consolidate the C-suite by including peers in the journey, implementing quantitative discipline, and bringing transparency to growth decisions by establishing profit-and-loss accountability.
Spotlight on: Surf Plugin
ChatGPT Plugins have been around for a while now. Surf Plugin is a browser extension that lets you access and use various ChatGPT plugins on any website. With Surf Plugin, you can easily interact with different ChatGPT models, such as assistants, experts, writers, and more.
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