When times of economic turbulence arrive, there is a lot of discussion within the startup community about how to manage marketing costs.
At a conference a few weeks ago, I was approached by a startup founder who had just raised his fundraiser. He had a dilemma: “Is it still necessary to devote precious financial resources to marketing? Isn’t it better to suspend expensive advertising efforts and save money? »
When entrepreneurs and senior executives talk like this, alarm bells ring. This founder isn’t the only one with such concerns: his questions are familiar to many marketers, myself included, who have heard them during times of economic uncertainty. Based on interviews with founders and investors, as well as my experience analyzing marketing budgets across various industries, startups might be spending around 40-60% of their raised funds on marketing. When they need to save money, they are often tempted to drastically reduce or even eliminate their marketing spend.
However, there are also risks in venturing into uncharted waters – the changing market in general and the advertising landscape in particular. To mitigate these risks, companies should take four steps before rethinking their marketing action plan.
Evaluate the effectiveness of an existing marketing strategy
The first thing to do is to assess each component of your marketing mix, examining whether key goals and metrics can be achieved in the current environment. You need to have a clear picture of which channels are most effective at growing awareness and leads, as well as which channels are failing to meet their goals and are an inefficient line of expense in your budget. Previously planned promotions can often become stale once this analysis is done, so you will need to develop a new set of activities and do it quickly.
There is a wide range of marketing instruments available to implement. Some companies may prefer to start with a small performance campaign to test new social media channels. Others may choose to completely revamp their marketing strategy, prioritizing one channel or promotional activity to achieve major goals. There’s no one-size-fits-all formula, but successful companies thoroughly analyze the impact of the early stages to spot what works and what doesn’t, especially during a recession.
Take a holistic look at target markets
Conventional business wisdom says that making revisions in a marketing strategy without considering market conditions leads to failure. It can even lead the company to bankruptcy by betting on bad activities, in dissonance with the external environment. This mistake often occurs, with obvious failure, at a time when changing economic circumstances coincide with the need for rapid business growth on the heels of innovation.
To adapt to the new economic reality and drive revenue growth now and in the future, companies need to regularly assess which marketing companies are performing best in their target industries. For example, they can analyze what differentiates digital marketing campaigns that have the highest return on ad spend from campaigns with the worst performing metrics and what promotional methods they can use as a result of this diagnosis.
This approach will allow companies to make better decisions when allocating their budget to target markets, freeing up resources to experiment with promising options and increasing marketing ROI along the way.
Rethink your business communication
When the realities of the economy change, many companies, whether they are early-stage startups or established organizations, recognize the growing need to stay in constant contact with their existing customers and reach out to newcomers. potentials. Everything is questioned, from which communication channels are the best to interact with customers, how to deliver messages on these channels and which messages would be well suited for the moment.
This often leads to companies replacing traditional communication and analysis processes with faster “learning-by-doing” iterations, trying to deliver updates in a timely manner so as not to confuse their customer base. Businesses also need to check if the messages are relevant to their offerings and if they continue to grab the attention of their target audiences.
If virtual events, for example, are part of your marketing mix, you can see early indicators of interest or absence by answering a few questions. Do customers come back after your webinars or conferences? Is the information on your social media pages generating interest and audience growth? How long does a visitor’s session on your website last on average?
Build the right marketing team
Triggered by the economic turmoil, business goals often shift, leading to a mismatch between teams’ skills and their work priorities. Such misalignment can result in a marketing maneuver that misses the new goals holistically.
For this reason, companies must redefine their priorities promotional activities and channels, allowing teams to jostle each other – or mobilize the necessary skills around a project – to deliver reconsidered goals.
In a recent conversation with the founder of a consumer tech start-up about what it means to build a marketing team, I saw an illustration of this: initially, his team was perfectly suited for brand building exercises, but later he needed people. with strong digital skills to accelerate customer acquisition and revenue generation given its unclear outlook on the next round of funding. Therefore, he adjusted his personal balance by focusing on digital marketers rather than brand managers.
Three months later, it became clear that this was a win-win decision for the current stage of the business lifecycle.
Of course, it can be tempting to take the easy way out and cut an advertising budget right away. But performing a 4-step marketing diagnostic will help you get a full picture of whether or not past goals fit with today’s business landscape. Based on the results of this analysis, you will be able to select the most effective promotional activities, instruments and channels that can generate maximum return on your marketing spend.
Svetlana Stotskaya is an independent marketing consultant with deep expertise in strategic marketing and brand management.