Article

Eric Jan C. van Putten
Eric Jan C. van Putten 30 April 2020
Categories B2B, B2C

Marketing Budget Scenario Planning During Volatile Times

What will be the effect of pressing times on marketing budgets? And what is the effect of increased and decreased spending on business results further down the line?

Depending on when your financial years starts, it either just started, or you are soon going to start planning, either way it will be challenging and probably doesn’t look great. But if an organisation is able to stay on course, or even increase their marketing spend, the organisation might outgrow its competition.

Coming out a winner

Research done around company performance during recessions show that companies that decrease marketing spend will have a negative growth of a couple percent. The ones that are able to increase their marketing spend are able to grow double digits.

“Firms that took specific action entering the last economic turn then exited the turn stronger and more focused, and they exploited this leadership in the following years. These winners reacted fast, conserved cash and were ready to invest when others were not.” – Gartner

Of course, cashflow challenges would certainly put a brake on things, but being aware of the possibilities and the different scenarios that might play out will make your team nimble enough to get ahead of things and no longer try to keep up.

Current times have shown that organisations, including the marketing department, need to be able to shift quickly. Being able to work from home within days, focus on business results and potentially even pivoting parts of the business completely. Sales performance numbers might take a backseat, customer experience and sentiment jump into the driver’s seat.

Brand Sentiment

In a matter of weeks we have seen enough examples of organisations where this has gone wrong and where these actions might have a bigger, longer negative impact than the potential recession we are facing. I’m thinking of companies like Bird, and retailers that  decided not to pay their suppliers anymore, or lengthened the payment to 150 days.

On the flip side, there are plenty of fascinating ‘fun’ examples. Companies recognise that everyone is in a 100% work from home situation, including the kids - so they bring out colouring books so that the parents can undisturbed eat up ‘scarce bandwidth’ on Friday drinks with their colleagues in front of full HD webcams. 

This will pressure any department to take another look at the planning and for marketing this is no different. Marketing should work closely with leadership and sales to identify several scenarios that will cover an increase, stable or decrease of available budgets related to company performance and adjusted outlook. 

Increasing or decrease of budget

In the case where there is more budget available, would you increase budgets across your current channels, or pinpoint the ones that are already better (short term) performers or potentially even re-arrange current budgets? And is your team and organisation able to make these changes quick enough so that the effects can be maximised short and longer term?

If your budget is going to get squeezed, how are you preparing for this? Will it come as a surprise? What would it do to your planning? A good tip, also given in the earlier referenced webinar, is to combine sentiment with numbers and arguments.

If budgets are going to go down what will the impact be? Show leadership that if your budget goes down by x percent, pipeline and won revenue would be going down by x as well.

Depending on sales cycles this downward spiral might not appear immediately, making it look like an interesting choice to cut cost now… but the negative effect will be there at a later stage, prolonging the negative effects on the company well after the current situation.

That said there is a good chance that you still need to cut budget, be prepared to know where you would cut it. And it’s this, forced, exercise that might actually turn out to be good.

Focus on what drives result

Focus on all the activities that drive results (and this could be lead generation, but also brand awareness) and think about which ones it's better to pause or stop. Figure out the cost per lead, or cost per results, get the involved time investments that come with them and create a priority list of what to keep and what to axe first. Because let’s face it, there is always a channel or a campaign you haven’t been too happy with but was still within the acceptable criteria to keep it going and just not a priority to focus on at the time.

Conclusion, marketing is always changing, now is no different:

🦌 Don’t be like a deer looking into headlights
❤️ Sentiment became a BIG player, instantly
💰 Expect adjustments to your marketing budget
🔎 (re)Focus on your channels

Stay safe, and stay healthy!

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