Marketing Investments A Must To Survive Recessions
During the current market conditions, companies must continue to invest in digital marketing to survive in the short and long-term.
However, this is not what we are seeing.
CEOs and businesses have frozen, cut, or delayed marketing budgets by 90%, according to a recent survey conducted by Econsultancy.
And 85% of marketing departments have paused new hires.
It is a “normal” response to go into survival mode.
You tighten everything down by implementing cost-cutting tactics. When the business makes decisions, it looks through a “damage control” lens.
The result – carnage spills out as finance departments deploy across-the-company cuts.
Also, customer satisfaction decreases as companies try to hold customer service levels the same with less staff and resources.
Companies need to act now if they want to bounce back post-recession.
For many business owners, it may seem counter-intuitive to continue or even ramp up digital marketing campaigns during economic downturns.
However, many business studies have shown that the benefits of continuing marketing investments outweigh the potential negative impacts.
In a Harvard Business School study of 4,700 businesses that experienced a recession, only 21% of the companies who cut costs faster and more profound than rivals rebounded post-recession conditions.
These companies went into crisis mode and lowered headcount, reduced operating costs, decreased marketing spending and implemented other cash preservation policies.
The Harvard study showed that companies (labeled progressive companies) who selectively reduce operating costs (through focusing on operational efficiencies) and continue to make investments in digital marketing, R & D, and new assets, outperformed the cost-cutting companies post-recession.
Companies that took a balanced approach focused on improving operating efficiencies, and continued to market, were 37% likely to pull ahead post-recession.
In reviewing sales and profit data, progressive companies grew sales by 13% and profits by 12%, while defensive companies saw a 6% sales growth and a 4% profit growth.
And the study examined the top 200 companies three years after the 2000 recession and found that progressive companies average $6.6 billion in profits.
Defensive companies only saw a $600 million profit increase on average.
To survive a recession, it is best to take a balanced offensive and defensive approach. This means focusing on cutting costs through operational efficiencies and reduce headcount sparingly.
Continue to market (and, sometimes, increase your digital marketing efforts) to help ensure your company will endure the recession and come out the other side stronger and more profitable.
Digital marketing is an excellent tactic to use during both booming and lean business times. Let’t talk and see where I can help your company.