As a marketing agency, we would obviously answer in the affirmative. Let’s break down why the answer for any business should be YES, you should increase your marketing budget.
We’ve seen recessions, the 2008 crisis, bear markets, and inflation in American history, so there is plenty of data on the subject. Studies have shown that those who increased budgets in areas such as marketing and advertising fared far better than those that did not. In a relatively recent study, Bain & Company saw this as well:
“The winners grew at a 17% compound annual growth rate (CAGR) during the downturn, compared with 0% among the losers. What’s more, the winners locked in gains to grow at an average 13% CAGR in the years after the downturn, while the losers stalled at 1%.”
As you can see, not only did increasing their marketing budgets help companies weather the economic storm, the move led to future sustainable growth and ROI.
Why Companies Should Increase Their Marketing Budgets
When looking to scale back expenditures, it can be tempting to see marketing as a luxury. In lean times luxuries, by definition, are not necessary for daily existence. However, it’s a misconception to view marketing as a luxury. Marketing done right will produce measurable results. You can literally equate dollars spent to dollars received.
Here are just some of the benefits of marketing:
- Brand awareness
- Targeting the right audience
- Engaging existing and potential customers
- Driving more website and foot traffic
- Measurable results
- Dollars spent mean dollars earned
- Lays a foundation for long-term success
Keeping your brand in front of customers during low consumer spending periods will influence them to choose you over a competitor when fewer resources are available. It will foster brand affinity as many other companies drop from the landscape. As a result, customer loyalty will benefit your brand when better financial times return.
Be Smart When Increasing Your Marketing Budget
You’ll want to focus on marketing generating the best returns when every dollar counts. During the COVID pandemic of 2020, we saw online shopping and activity increase by large numbers.
“According to the most recent 2020 ARTS release, e-commerce sales increased by $244.2 billion or 43% in 2020…”
Not only did digital technology use grow—including websites, streaming TV, and mobile apps—most of these customers are still there. Allocating budget for digital marketing is more important than ever. That’s not to say other marketing efforts aren’t worthy. They certainly can be, especially when looking at individual company’s needs. The advantages of digital marketing include better audience targeting, better engagement, improved awareness and relevancy, and better reporting for measuring ROI.
If your budget is more constrained, content marketing is a great way to attract a larger audience if you already have qualified staff on hand. If not, this is another area to focus marketing dollars on by hiring an agency or writer to develop your content. Content marketing improves SEO dramatically and helps social media drive traffic to your website.
In the Face of Adversity, You Can Retreat or Attack It Head-on
Don’t just batten down the hatches when hard times come. Those that do slash marketing budgets risk being left behind. Companies see long-lasting success by prioritizing marketing to drive business in good times and bad. Marketing is an investment that actively provides dividends. It’s simply investing in yourself.
Don’t wait for hard times to come. Be proactive by putting your marketing dollars to work today.