It's OK to cut the budget

The adage that the businesses which maintain their marketing expenditure during a down-turn will be the ones that prosper in the end is backed by evidence.

As a statement, however, it was coined at a time when the marketing options were fewer than they are today. Short term adjustments to expenditure are not damaging and may indeed be exactly the right thing to do.

The extent to which a business is reliant on tactical marketing to drive sales volumes will influence the amount that needs to be spent during a down-turn. A business that relies on internet sales, for example, may have to increase its expenditure to generate a greater number of visits to the website and compensate for a drop in the conversion rate. To cut the marketing budget now would be to accept an immediate reduction in sales.

For many other businesses, a switch out of cash-hungry promotional activity and into a greater focus on looking after existing customers and using on-line and off-line networking and PR to attract new ones, could be a good idea and may even lead to a re-appraisal of the type of activity the company does over the longer term.

Marketing, through its own failings, will of course always be associated with promotional activity. The full marketing mix is much broader than this and a reduction in promotional activity could be more than compensated for by taking the time to identify a new product, a new niche or an improvement in the customer experience.

The mantra ‘don’t cut the marketing budget’ needs to be re-written as ‘don’t cut the marketing activity’: it’s not what you spend, but how you spend it that matters.