Why Marketing Should Never Be the First Expense Brands Cut In A Tough Market

Early on in a brands life, many Founders and CEO’s find their expenses outstrip their revenues. This rings especially true when you are bootstrapping your brands.

That’s why for many business owners, growth is the only path to early stage success (although there are some exceptions when your brand should not grow for a short period of time eg. fulfillment issues).

Yet sometimes growth, especially rapid growth, isn’t possible. When costs exceed revenue, sometimes your only choice is to begin cutting expenses: Staff. Inventory. Supplies. Product development. Fixed costs. Variable costs. Marketing.

Hang On…. Not so fast!

Unlike other expenses, marketing expenses are relatively easy to cut. You can pause a social media ad or marketing campaign. You can cancel media advertising. You can put traditional marketing campaigns on hold.
Now the above might sound ideal at the time, however in the process, you might find that you only increase your brands burn rate. It sounds simple, and quite frankly it is: without sales, you don’t have revenue and without revenue -especially if you’re funding your business with that revenue, you soon won’t have a business.

It is important to keep in mind that there is a difference between efficient marketing and simply throwing money at acquiring customers. While a high customer acquisition cost (CAC) can make sense if new customers generate consistent, long-term revenue, most brands can’t afford a high CAC.

So, when you miss sales targets, or when you need to cut costs, make sure your marketing costs are not the first expense you cut.

Why?

Let’s look at four key reasons.

It is almost impossible to save your way to profitability.
Unless your brand’s spending is totally out of control, it’s almost impossible to save your way to profitability. When fixed costs are high, when cash flow is poor, when labour makes up a major portion of your costs, the only way to become profitable is to increase sales.

And what is the best way to increase sales?

Marketing is the ultimate Catch-22 for a brand.
A brand is like the cliché about a tree falling in the forest: if no one hears about your products and services, your top line won’t make a sound.
It’s almost impossible to raise awareness, generate leads, land customers and build a brand without spending money on marketing. Sure, word of mouth helps, as do referrals, but lighthouse and new customers as a whole, must come from somewhere.

And that “somewhere” is marketing.

Effective marketing campaigns demand time and repetition.
While the old adage “rule of 7” (the idea in which potential customers need to be exposed to an ad seven times before they will act) might be outdated, frequency and repetition is still imperative to generating T-O-M awareness for any brand.

Many potential customers will not act the first time they see an ad, a promotion, or a piece of content marketing. Many will not act the second or third time. However, often they will down the line.
Value propositions take time to establish themselves. Brand awareness takes time. While direct-response marketing can often produce short-term results, most forms of marketing require longer-term investments in money and time to pay off.

That’s why cutting your marketing expense might be the worst thing you can do, especially if all the groundwork you have laid is about to pay off.

The contrarian approach is often the best approach.
Various studies demonstrate that companies who increase spending during a downturn enjoy greater gains in market share than those who slash their advertising investment. In fact, when markets inflate, market share is much more difficult to come by. If your industry as a whole is experiencing a downturn, that may mean the right tactic is to increase your marketing spend.

But what if your industry is doing fine but your brand is not?

Sit down and seriously evaluate your products and services. Make certain that your business truly fills a need or solves a problem and that it provides excellent service. Ensure that your operations are as streamlined and efficient as possible. In short, you need to make sure your business is taking care of business.

If you can confirm that it is, don’t allow marketing to be the first thing you cut.

Always remember, that if you are providing valuable products or services, helping people understand the advantages they provide, and the difference these products or services can make in their lives, could be the one thing you can’t afford not to do.