When faced with a pandemic, many businesses’ immediate instinct is to slash their marketing budget. Even Google planned to cut its marketing budget by as much as half in April.
However, research shows that businesses actually benefit in terms of sales, market share, and earnings when they maintain or expand their marketing efforts during a crisis. So, how should you approach your marketing budget during a pandemic?
If possible, don’t cut it. Change the way you spend it.
How the marketing landscape has changed
During a recession, the marketing landscape changes in two key ways:
- There is less noise from other businesses.
- The cost of advertising becomes more affordable.
Ads are insanely cheap right now. During Q1, Facebook saw 50% drop in CPM, though impressions actually doubled. A typical marketing budget is 5-10%, (higher if you’re wanting to grow). But in a recession marketplace, that budget will stretch further and work harder if you allocate your funds correctly. If you employ your budget strategically, you can jump from a lagger to a leader during a crisis—without spending more.
|Other ways the marketing landscape has changed since the pandemic:|
How to repurpose your marketing budget
1. Cut low-performing initiatives and eliminate inefficiencies. Take time to carefully examine your initiatives and ROI. Eliminate those that are failing to actively instigate growth, (along with experimental marketing and tests), and invest in reliable initiatives instead. These might include proven features like Webchat, retargeting ads, and Google adwords. Also take time to examine your processes to cut inefficiencies (systems and programs that aren’t being used effectively).
2. Increase investment in fewer channels. A marketing budget spread thin is one that delivers few and patchy results. Identify your highest delivering channels (or ones that demonstrate high potential) and do a deep dive. The key is to work smarter, not harder. For example, reviews are free and will actually market for you (very effectively) if you invest in and manage them correctly. Consider investing in research and development as well. Research shows that products launched during a recession have both higher long-term survival chances and higher sales revenues. This is often because there are fewer new products to compete with, and companies maintaining R&D have focused investment in their best prospects.
3. Take advantage of reduced ad costs and fewer competitors. Get aggressive and invest in more ads! If your business has cash reserves and can afford to spend, now is the time to beat out competition. If you have a limited budget, consider focusing on retargeting ads, which are among the highest converting. Opt for PPC over PPI to maximize the use of your budgeting dollars.
|A couple examples of how local businesses are effectively approaching their marketing budgets:|
Maintaining a growth mentality during a crisis can be challenging. It’s understandable that your first instinct is to cut anything considered non-essential for short-term relief. But the stats are in. If you can fight the herd mentality by maintaining/expanding your marketing budget and using it more strategically, you will set yourself up for long-term success and beat the competition.
To learn more about how to reopen or stay in business successfully during a pandemic, download Your Guide to Reopening.