Why Marketing is the First to be Cut in a Recession (and How to Fix it)
By Mina Guirguis, Marketing Consultant at Heinz Marketing
Whenever companies are looking to downsize, the marketing department is often the first to get hit with cuts. Marketing is often seen as an area to cut back without impacting core operations. But why is this the case and is there any way we can change this view? Let’s discuss why marketing always seems to see layoffs first and some ways you can help prevent this.
Marketing Viewed as a Luxury
One of the reasons marketing departments are cut during a recession is that marketing tends to be viewed as a luxury rather than a necessity. When times are tough, companies prioritize their spending on essential items over non-essential items like advertising and promotion. Marketing is seen as something that can be delayed or scaled back, whereas core operational expenses are deemed essential to keep the business running. So how do you change the higher-ups view on this? Give them reason to see marketing is a necessity as well. When done right, marketing is a main driver of revenue, along with sales. The way to do this is to have a robust attribution model and clear ROI on marketing initiatives. If the C-Suite can see exactly how marketing dollars become revenue, there will be a much harder conversation when it comes to cutting marketing spend.
Another issue marketing has is the impact is not always immediately visible. It can take time for a marketing campaign to show results, and during a recession, companies want to see immediate results to give confidence they will stay afloat. They may believe they don’t have time to wait for a long-term marketing campaign to pay off. Instead, they need to focus on short-term goals, such as reducing costs and increasing revenue quickly. This is a little harder to solve on marketing’s end. Marketing is successful in the long term, however having short-term marketing goals may help with this. How many new leads are you bringing in each month? How many of those convert in deals? What channels can you cut first that are producing the least ROI? Having these key metrics ready for when executives are looking to cut will help keep marketing be seen as an essential department.
Lack of Visibility
Lastly, the lack of tangible metrics to measure the effectiveness of marketing campaigns also plays a role. For example, it’s easy to measure how many deals sales is closing, but it’s much harder to quantify the impact of a marketing campaign on a company’s bottom line. This lack of clarity can make it challenging for companies to justify the expense of a marketing department during a recession. You’re probably seeing a pattern by now. Having clear metrics and goals that tie to revenue is key. Vanity metrics like impressions and CTR only get you so far. Being able to see conversions from each stage all the way to close is the best way to show marketing is vital to a company’s operations.
While cutting marketing spending may seem like a logical decision during a recession, companies would do well not to undermine long-term success by neglecting marketing efforts. Ultimately, a well-executed marketing strategy and clearly defined metrics can be the key to weathering the storm of a recession and coming out stronger on the other side.