There is a natural tendency to cut marketing spending during a down economic cycle. When revenues and margin begin to decrease, business managers begin to look at ways to cut costs to maintain an acceptable level of profitability.
Marketing is typically in one of those "first to go" categories. While understandable since measuring ROI can be tricky given the demand creation cycle, cutting these activities actually reinforces the downturn for the company.
Even when there is not a downturn, some firms choose to cut marketing when things are going well -- I saw this a few times in the wine industry when I worked for Ed Schwartz Public Relations (nowCalhoun & Company). In one particular example, the company worked diligently for two years to get coverage in a major business publication. Soon after, the client called to end the engagement saying that the work was phenomenal and that he no longer needed PR. Rather than invest in building the momentum, he decided to choke it off at its peak.
This research study by McGraw Hill was cited in a North Bay Business Journal article that came through today's Daily Links. The main take away for me is a reminder that some businesses grow during recessions. For example, one of my clients is up 70% YTD, and the main reasons for it are enhanced focus among the (fabulous) team of people and a strong, targeted marketing plan.
Investing in your brand awareness and loyalty (especially within your target market) when others are cutting, actually brings your business a greater ROI.
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