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Why Do Businesses Cut Marketing Budgets First?

On this episode of Uncommon Marketing Matters, Amber DeFabio, Uncommon Marketing Works’ Growth Marketing Manager, sat down with Amy Foley, Co-founder of Inbound Back Office. 

Inbound Back Office provides back-office support and team augmentation for your digital agency, with a focus on serving marketing agencies and HubSpot partners.

Amy started her entrepreneurial journey in 2011 when she left her corporate job to have more flexibility and time with her family and started a small Virtual Assistant business. The business evolved, with the help of her co-founder, Michael Reynolds, into what is now known as Inbound Back Office.

In their conversation, Amy touched on how, at the beginning of the pandemic, they found some of their agency clients coming to them saying their clients wanted to cut their marketing budgets. The clients that did cut their marketing budget or cut their marketing team learned some valuable lessons on how quickly you can lose your traction. The ones that kept their marketing budgets intact are the ones that came out on top above their competitors.

This got us thinking… Why do businesses cut marketing budgets first? What are the repercussions of this? And what alternatives are there to maintaining your budget in times of financial uncertainty?

Why Are Marketing Budgets Often Cut First?

When businesses are looking to cut costs, marketing is often one of the first departments to see budget cuts. There are a few reasons why this is the case:

  • Marketing can be seen as a discretionary expense. This means that it can be seen as not being essential to the core operations of the business and can be cut without impacting the company too much.
  • Effective marketing budgets are often large and can be a significant portion of a company’s overall budget. This means that cutting marketing can have a big impact on the bottom line in an immediate sense.
  • Marketing expenses can be difficult to track and justify. This makes it harder for marketing departments to prove their worth and make the case for maintaining their budget. The best marketing strategies are integrated, and unless a company has a CRM system that tracks all marketing and sales efforts, directly correlating marketing efforts to customer acquisition can be challenging and time consuming.

In times of economic recession, marketing budget cuts are often unavoidable, unfortunately. However, there are ways to manage these cuts so that they ease the burden on the budget but don’t have a major impact on your marketing efforts.

  • Prioritize your marketing spend. Focus your budget on the strategies that will have the biggest impact and ROI. If you find that the majority of your marketing efforts are not strategic and purposefully guided, you can be spending a large portion on unnecessary money.
  • Get creative. Find new, cost-effective ways to reach your target audience to get the most out of your marketing budget. If you previously relied on Google Ads for the main lead-generation tactic, see if areas like LinkedIn Advertising are more cost-effective.
  • Make sure to communicate with your team about the budget cuts. This will help everyone understand the situation and make sure that everyone is on the same page about how to proceed. This will also allow marketing teams to strategically plan future efforts with realistic constraints.

While cutting marketing budgets during a recession may be unavoidable, the real secret to success in a recession is finding ways to make the most effective use out of the funds you have. Build new strategies, think outside of the box, and put your money into ideas that will provide the lifeline your business needs.

4 Things To Look At When Planning Marketing Cuts 

  1. End contracts with external marketing agencies or subcontractors 
  2. Get rid of unused marketing software and tools
  3. Hold off on new recruitment and hiring new candidates
  4. Suspend any new, unnecessary product launches and updates

Don’t impulsively make cuts… You can manage marketing budget cuts now and in the future, without taking any undue risks. 

Not sure how to budget well during a crisis? Use budgeting and forecasting software to help you make better decisions rather than cutting essential business functions, like marketing.

If you’re looking for an agency who keeps your marketing budget in mind with every marketing strategy created, Uncommon Marketing Works is here to help. Our strategic and focused efforts are created with your target audience in mind and consider the best ways to get your information to them directly, without wasting money on insufficient efforts. Contact us today to discuss your marketing plan and the best way to streamline marketing spend.

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