It’s an old adage. What’s the first expense businesses cut when the economic climate turns unfavorable? Well, marketing of course! But is this a good decision? Absolutely not!
Marketing expenses are not like other business expenses, which primarily trail revenue. Marketing is an investment in creating revenue and one of the few expenses that precede revenue. If a soft economy is compressing your top line, there are a number of trailing expenses that can be cut to react to that. Things like payroll, overtime, office supplies and travel are a few examples. But cutting marketing expenses, which are an investment in revenue growth, is like pouring gasoline on the fire, placing further pressure on revenue.
Imagine you are swimming in the ocean, and it is relatively easy to swim back to shore. Then a riptide occurs, pushing you out to sea and making it much more difficult to achieve your goal of reaching shore. You have a choice: do you swim harder to achieve your goal or relax to conserve your energy so you might last a little longer before drowning? Well, economic uncertainty is that riptide, already making it much more difficult to achieve your revenue goals. Should you reduce your investment in creating revenue and make the problem worse or should you “swim harder” to try and overcome this threat. You better swim like hell! The truth is that the best way, no actually the ONLY way, to maintain or grow revenue in a challenging economy is to take market share! The pie is shrinking, so you need a bigger percentage of it to keep from being hungry. And the only way to increase market share is to get your message out there with a better value proposition than the competition. That’s marketing.
So why did marketing expenses become the “go to” expense category to cut when times get tough? It’s because historically it was nearly impossible to directly measure the result you were achieving with your marketing spend. “How many people saw my print ad, and did it result in any sales? So, if I can’t measure it, and I can’t tell if it’s working, I may as well cut it”. Well times have changed. Today’s digital marketing solutions are highly measurable and make it easy to directly track the sales that result from a campaign. This creates complete visibility to the Return on Investment for that marketing spend. You know you are getting what you pay for. With multiple touch digital campaigns, we are seeing retailers routinely achieve 400% to 1,000% ROI. If you gave me a dollar and were highly confident you’d receive $5 - $11 back, wouldn’t you hand me that dollar?
So, what are you going to do? Let the rough economic tide drag you out to sea or swim like hell by investing in taking market share to achieve your revenue goals?