When Do You Cut Your Marketing Budget?

Marketing Budget
Originally uploaded by Leo Reynolds

When should you cut your marketing budget?  I think when times are good, too good and you can’t keep up.  When the orders are piling in, you can coast for a little while.  In planning media it’s called a hiatus.  Three weeks on, one week off. 

That’s very different than slashing your marketing budget when things are looking uncertain.  By marketing during uncertainty, your keeping your business on the path upward.  By cutting the marketing budget, you steer your business away from growth and maybe even downward in a spiral.

Are you responsible for the sales and marketing results for your business?  What’s your technique for sustaining your business during uncertain times?

Author: Chris Brown

Business owner operating a marketing consulting firm. Online Publisher. Keynote Speaker.

7 thoughts on “When Do You Cut Your Marketing Budget?”

  1. This is definitely a common topic amongst small business owners in light of the current economic situation. Under no circumstances should anyone cut marketing. However, marketing on a shoestring budget is possible. It requires more work and creativity but the results can be effective.

  2. Pink Heels:
    You’re so right. There are always alternatives. And if you’re doing measurements, you may find that the lower cost alternative decreases your overall cost per sale. And that’s a good thing, right?
    Thanks for jumping in!

  3. Chris, thanks for the interesting question, and an opportunity to weigh in:-).

    We do sales and marketing a bit differently here in that we use word of mouth only to market. However, I like to think that marketing is more about the way a product can genuinely prosper a client – and that incentive should not change in tough times. In fact, the clients should even be more at the center then, since they too are likely feeling the tighter purse strings:-) Great post Chris!

  4. Ellen:
    I think that Word of Mouth is the backbone of a referral program and should not be discounted as a powerful marketing technique.

    Thanks for adding to the conversation!

  5. I would recommend a cut in the marketing budget when your competitors are doing little or no marketing activities.You have to be really careful about creating awareness for the category you are playing in while your competitors sit back harness the benefits of the awareness you are creating while riding on your back.
    If you are poineer in the category watch it or else your brand name can be commoditised.

  6. Ah yes, If it were only that simple.

    There are TWO different ways to look at this question. Naturally, companies that sell advertising and marketing always come up with the same conclusion. If the economic times are tough, then one should NOT cut advertising expenses. And if economic times are good, guest what? One should still STILL not cut advertising expenses. In other words, no matter how bad or good the economy, just keep buying advertising. Well, maybe yes and maybe no.

    I understand the logic of no cutting advertising in tough times. But the flip side of this also has merit in certain situations. And Advertising companies are NEVER going to admit this.

    For example, if the supply of customers has dramatically DECREASED for your entire industry, and you don’t cut your adversiting expense to some extent, then your advertising cost PER SALE may go through the ceiling, meaning that you now have to sell even MORE of your product in a tough market than you did in a good market just to break even. And if you can’t, then your NOI goes down even LOWER. Put your numbers on an Excel Worksheet and you may see what I mean.

    Again this is more true in some industries than others. But it can be a statistical fact that advertising companies either don’t realize or for obvious reasons simply prefer not to mention.

  7. Whatever a marketing organization does with its budget during an economic meltdown, it must spend on optimizing its operation even in the worst of times.

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