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Blog / Cut Marketing Budgets or Cut Inefficiency — What to Do in a Recession?

Cut Marketing Budgets or Cut Inefficiency — What to Do in a Recession?

With recession forecasts in flux, the financial future is uncertain. Optimistically, we could take predictions of continued budget growth as a sign that marketers are determined to keep investing, despite a gloomy outlook for the economic prospects for their own companies and sectors. But with the IPA Bellwether report predicting ad spend declines, it’s likely many teams are still on track for budget cuts. 


As they aim to deliver more for less, avoiding panic strategies is going to be crucial. Under pressure, it’s easy to go one of two ways: using the scattergun model of spreading spend as thinly as possible, or simply pouring money into channels that have worked before. 

To avoid the poor results both of these approaches deliver, marketers must be bold. Using real-time performance data to guide investments will help them make brave yet informed choices; with accurate insights uncovering new opportunities to harness more effective mediums, while ensuring they don’t waste budgets on uninspiring, vanilla campaigns.

Firms are expanding marketing budgets despite an impending downturn

In case you missed it, the latest IPA Bellwether report identified a positive net balance of 24.2% in marketing budgets indicating that more companies expect an increase in ad spend than ones who foresee a decrease.

Taking into account these figures, the implications are that the long-predicted recession may well be a relatively short one. The IMF’s World Economic Outlook for the World Output and UK specifically also points to this. 

Companies that increase their marketing spend will not only reap the benefits of brand awareness and market share at a time when others might be scaling back spend, but they will help to reduce the length of the recession. 

Paul Bainsfair, IPA Director General, comments on the latest survey results, saying “We can see that the companies that can are holding their nerve and continuing to invest in marketing through the downturn, with supporting anecdotal evidence from the report also revealed that a lot of companies who are concerned about losing market share to competitors have either maintained or increased their spend accordingly. This indicates that marketing is being used both defensively and offensively.”

Marketing teams need to look at how they can cut down on inefficiency — not on spend

In times of recession and an uncertain economy, the automatic response is often to cut advertising budgets. While this might be a good short-term solution to obtain some breathing space and compensate for a decrease in demand, it isn’t necessarily the best long-term strategy. While marketing spend has often been one of the first areas to see budget cuts, there’s mounting evidence to suggest cutting ad spend in times of crisis is counterproductive. 

Procter & Gamble (P&G) is one organization that stands out for continuously recognizing the need to keep going, riding through multiple bumps over the last 185 years, from major conflicts to financial slumps. During its Q3 results call in the initial global pandemic peak, then joint CFO and COO Jon Moeller underlined the vital importance of doubling down in difficult circumstances; arguing this was not the moment to retrench.

“The best response to what we are challenged with today is to push forward, not to pull back. 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 served their and their families’ needs, which is why it’s not time to go off-air.”

Moeller was right. Maintaining P&G’s marketing presence, and spend, enabled it to fuel revenue growth of 4% in 2020 as many other companies saw numbers fall, with a continued upswing of 7.3% growth last year.

people at screen - Marketing teams need to look at how they can cut down on inefficiency — not on spend

Marketing teams need to look at how they can cut down on inefficiency — not on spend


Doubling down on data will help businesses navigate the recession

Carefully reallocating marketing budgets will be a crucial practice in the very near future. Sure — there will be a need to scale back in some areas, however, the attention paid to optimizing the investment more efficiently is what will be the differentiator. Using best-in-class and dedicated tools and strategies is where the focus should be in the coming months. Businesses need to balance costs carefully, running calculations of how much they can save from stalling data ops investment, versus the benefits a well-supported team can drive.

Previous recessions have shown that data-mature businesses are more resilient to recession. Allowing data ops spend to stagnate will cause multiple issues over time. As analytics tools and practices evolve, teams will fall further behind and be less able to squeeze as much as they can out of marketing budgets. Continued underinvestment also makes it more likely they will battle with further inefficiencies that add to already unwieldy workloads and impact productivity. 

Commenting on the latest survey results, Joe Hayes, Senior Economist at S&P Global Market Intelligence, says, "The latest Bellwether survey provided some interesting insights into how UK companies are planning to navigate an impending UK recession. Another quarterly expansion in total marketing budgets at a time when business costs have hit multi-decade highs and consumer confidence has plunged suggests many businesses understand the importance of investing in resources that will help them get through the downturn as best as possible."

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