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Why Businesses Should Not Cut Marketing Budget In Tough Economic Times:


We hear it in discussions all too often… tough economic times, inflation, Eskom load shedding, negative consumer confidence, political instability, prices rising, you know the type of discussion being referred to. All of these, combined with a need for reaction creates what can only be referred to as the perfect storm for the all to often go to response – cutting of the marketing and advertising budget.



Whilst this is the most common response from businesses and brands, we believe that there is an opportunity that is being missed. The opportunity, to take a moment, to stop, to re-asses this somewhat knee-jerk reaction, and as these three vital questions:

- Is this the best solution for the business and brand?

- Are we still able to achieve our objectives?

- What are our competitors doing?


There have been numerous examples of brands and businesses that. in tougher economic times that opt to not cut budget, and continue to market and advertise that enjoyed steady sales growth, increased brand loyalty as well as increased market share.


A research study in McGraw-Hill Research’s looked at the 1985 recession in the United Staates, and found the following: companies that either maintained or increased their advertising budgets during that time experienced a 256% increase in sales versus companies that cut their advertising budgets. A similar study in both theHarvard Business Reviewand the American Business Press, which looked at the 1974-1975 recession, noted that companies who did not cut marketing expenses experienced higher sales and net income during those two years, as well as the two years following the recession years, than those companies who cut their marketing budgets in either or both recession years.

The Harvard Business Reviewgoes on to quote, and provide even more reasoning, for brands and businesses, to take a moment, to stop and to re-asses the cutting of marketing and advertising budgets, is this:


“Companies that injudiciously slash marketing spending often find that they later must spend far more than they saved in order to recover from their prolonged absence from the media landscape.”

What we can be certain of, is that these tough economic times, negative consumer confidence, political instability as well as challenges related to budgets and balancing the books, will pass. These challenges are not new to the business world, nor us as marketers. To achieve measured success, you must seize the opportunities that are available to you. Identify and exploit gaps in the market. Be the brand and business that thinks smarter, acts faster, tries new things and makes a plan to surprise and delight your customers. Keep giving them a reason to believe in you, your offering, and your brand. Work as a team to provide solutions to stretch the budget, and achieve the best possible ROI. In summary, simply put – if you are not active in the market, you are not being seen and therefore you are not known.


What about the worst case scenario, and the advertising and marketing budget is cut? It’s now more important than ever before, to communicate well with your team. If your staff feel insecure and unsure about their future, they will look to leave. Your best team members will often be picked up (perhaps by your competition), and you are left with unhappy, unsure and negative staff, which breeds a culture of cynicism and reduced performance. So if you are going to cut your budget – keep some aside for internalization campaigns, consistent communication and staff motivation, as well as performance based incentives.




Crafted by Chris Midgley

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