September 02, 2020
During times of crisis, companies often slash marketing budgets with reckless abandon — but should they? Today’s global pandemic feels very different from the Great Recession not so long ago. People are still spending for goods and services, even getting antsy to open their wallets. They’re simply forced to buy online and have things delivered.
Maybe it’s time for companies to think differently, too. They should show some fortitude, tack into the wind, and double-down on marketing efforts. Wishful thinking? Perhaps.
The reality on the street, of course, is that many companies have cut marketing budgets in hopes of preserving the salesforce. Google took a hatchet to its marketing department, reducing the budget by half for the second part of this year and putting in place a hiring freeze. (For more on this, check out How to Keep Cool When Marketing Budgets Come Under Fire.)
This is the year of bad news piled on more bad news.
Forrester Research predicts that U.S. marketing spend will fall 28% by the end of 2021, in the most optimistic scenario. Offline media spending will continue its dramatic decrease for at least six to 12 months. Digital media spending’s pre-pandemic, double-digit growth rates have vanished. And agency spending is cratering, down about 40%, resulting in more than 60,000 lost agency jobs.
Can an election year, which usually drives a lot of marketing spend, reverse the tide? It’s far from certain, while a spike in infections in the fall sounds more likely.
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But this story is about making the case for an increase in marketing budgets, not drudging up cost-cutting news. Let’s start with signs of a different way of thinking.
One of the biggest signs came in late July. On its earnings call, McDonald’s said it will add $200 million to its 2020 “marketing war chest,” that is, its incremental marketing spend across the United States and top international markets. Additionally, McDonald’s will roll all of its previous Q2 marketing cuts — the company cut Q2 marketing spend by 70% in the U.S. — over to Q3 and Q4, leading to a surge in marketing spend for the rest of the year.
Unilever, Proctor & Gamble and other big brands have made similar commitments. Unilever, for instance, plans to put “significant investment” toward brand campaigns and innovations tailored to the pandemic in the second half of this year, a return to spending after keeping its “powder dry” in Q2.
Proctor & Gamble also ramped up its marketing spend amid the pandemic. “There’s a big upside here in terms of reminding consumers of the benefits that they’ve experienced with our brands and how they’ve [met] their family’s needs, which is why this is not a time to go off air,” CFO Jon Moeller told investors in April.
Companies are seeing the digital upside to the pandemic.
Many brands are securing talented, creative marketers to communicate the new digital customer experience and connect with embattled customers with empathetic messaging that speaks to their immediate needs. They’re investing in technology, such as marketing automation, to engage customers more efficiently and effectively and spending on media with flexible placement, performance guarantees, good cancelation terms and great targeting.
As the pandemic makes everything digital, media consumption has exploded along with e-commerce. This has cast digital marketing in a leading role. Digital marketing content influences e-commerce sales, as well as greases the wheels for digital sales reps to close deals. (For more on this, check out Save Digital Assets, Cut the Frontline.)
“Our advice is, don’t stop marketing,” says Keith Johnston, vice president and group director at Forrester Research, on the company’s podcast last month. “There’s lots of evidence that those who keep marketing, who stay resilient and adapt their businesses through times of crisis, actually come out the other end succeeding and, in many cases, completely dominating their category.”
Tom Kaneshige is the Chief Content Officer at the CMO Council. He creates all forms of digital thought leadership content that helps growth and revenue officers, line of business leaders, and chief marketers succeed in their rapidly evolving roles. You can reach him at firstname.lastname@example.org.
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