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Why Marketing Breaks Have a Negative Influence on Your Brand

Why Marketing Breaks Have a Negative Influence on Your Brand

What do companies usually do when their income is shrinking due to a crisis? The first answer, which seems obvious, is reducing expenses. The company budget is getting cut in many departments, including marketing, which leads to serious consequences.

The Ehrenberg-Bass Institute came to this conclusion while researching the Australian companies. Due to coronavirus, the majority of companies reduced their spending on advertisement budgets.

The average reduction rate of those companies after the first year of advertisement hiatus is 16%, and this number reaches 25% in the 2nd year.

Longer ad break reduces the speed of a company returning on the pre-pandemic level of sales and higher. According to the research, those brands which did not provide a budget for marketing lost their income. Only a minority of surveyed brands, approximately 7% of all researched companies, were trying to find an opportunity to allocate a certain budget for advertisement.

B2B and B2C Influence

An important thing to understand is that the marketing budget proportions are different in every specific industry. Reducing the financing for advertisement affects B2B and B2C to varying degrees. Initially, B2B companies would have to spend less percentage of the revenue for marketing because their campaigns are more targeted and their marketing interacts with specific channels only. Meanwhile, B2C companies implement different kinds of marketing channels to encompass a wider audience. Last year, B2C companies would have to prioritize what marketing channels and tools were more relevant. A great example has shown the luxury brands: they started promoting their products on LinkedIn, even though the advertisement in this social media channel is more expensive than on Facebook. LinkedIn is a platform often used by people with a higher income and who can afford luxury products. That is why it was a successful strategy.

The relevance of the marketing channel had a bigger value than the price. Choosing relevancy over cheap CPM is crucial while overcoming the crisis. But worse than reducing the marketing budget and targeting cheap channels and keywords could only be marketing breaks. Let’s find out why.

Dangerous outcomes of marketing breaks

The fragile customer loyalty can be broken

B2B companies use marketing as the connecting link to the customers, building strong relationships and loyalty. Unlike B2B, B2C brands use marketing as an important part of their customer acquisition and conversion strategy and keep the active sales mechanism as a priority.

The B2C companies spend a large amount of money to generate new leads and increase the conversion rate. Cutting the marketing budget can provoke a decrease in attracting new customers and check-outs because the amount of advertisement, which is supposed to “warm-up” the audience before the sale, becomes smaller.

Again, relevance should be taken in the first place. It is important not how much the budget is allocated, but what for.

Prioritizing customer experience allows empathizing with the clients. That is how business-customer relationships are built. Once customers have been attached, they are more likely to react to company announcements and actions. From the B2C perspective, loyalty can be very fragile in comparison to companies in the B2B space.

Before, brands were trying to catch customer attention with sales and promotions. Now, what the brand does for society is essential. Think about Gen Z: their preferences on brands correlate with brand views, values, and social engagement.

Moreover, just publishing brand value on the website in the CSR category is no longer enough. The position must sound out loud, and the message should be spread, which requires financial investments. If there is a neutral or even an absence of social positioning, the company could be easily replaced with the competitors, who have stronger brand values awareness.

Your clients can have a bad impression

Let’s take a look from a B2B point of view. Unlike B2C businesses, B2B brands have more loyal and long-term connections. As it was mentioned, marketing has a connectional role between the brands. Marketing in B2B can generate leads, support sales by building the brand image, upsell products by straightening customer relationships.

Other companies follow vendors and suppliers because they see the professional importance: either it could be unique knowledge, industry insight, information, or other valuable content. The information can be passed through different marketing channels, like blogs, social media, educational platforms, events and webinars, podcasts, periodical publications, and conferences.

A marketing absence can be unpleasant evidence that a business shows no signs of life. And that can influence potential and existing customers. They can easily forget about the company’s existence, if the brand doesn’t declare about themselves, and turn to the competitors instead. The advertisement gap can provoke mistrust in the eyes of clients. That is why it is important to remind the customers about your experience through marketing.

It will make your rivals feel good

Those rivals, who decided not to cut the marketing budget, have potential over your company. That would be a perfect time for them to lure away your clients by advertising them more attractive propositions. Marketing is one of the tools of a company to declare, brag and show off in good lightning.

If a brand is not going to do that, their competitors will benefit from your inaction.

This situation may seem hard to resolve: the company’s income is low, and spending remains the same. What should companies do to stay afloat and be financially stable? Several pieces of advice will help you not cut off your marketing budget and do not risk your income.

Why Marketing Breaks Have a Negative Influence on Your Brand

Instead of cutting your budget, try this

Analyze changing needs of your audience

The audience is what sets the tone of any marketing strategy. Last year was full of unpredictable changes, restrictions, and negative media flow that raised fear and insecurity all around the world. Those brands that managed to react to the changed vibe of their audience, showing compassion and getting closer to people emotionally, increased their customers’ loyalty.

Marketing was responsible not only for selling products and services but also for bringing important messages out there. For example, that company cares about its customer and employee health, uninterrupted products delivery, and high-quality customer support. It was crucial to position brands according to the newly created consumer values.

After the worldwide roll-out of the vaccination and slow reopening for the summer season, fast and agile brands realized the importance of pent-up demand on their business.

What is pent-up demand? According to TheBusinessProfessor.com, “Pent-up demand is a build-up of demand for goods and services in an economy where consumers are unable or unwilling to make purchases to satisfy the demand at the present time.”

It was a perfect time to launch an aggressive marketing campaign for new customer acquisition and sales acceleration.

Considering the current political and economic situation, marketers should assess risks and develop new plans according to several possible future scenarios. What would you do if the borders were closed again? What if there is a new lockdown?

Knowing the customer needs, business environment, and certain set of actions in any particular situation will help to build a strong strategy and avoid future unforeseen obstacles.

At the end of the day, the future can have unexpected turns and pivots from any forecasts or predictions. But quality risk management and agility would always help to continue growing.

Overview your marketing tools

Obviously, the strategy that was approved in 2019 and the beginning of 2020 became useless. Some companies have adapted faster than others and even increased their income by thinking out of the box.

When changing marketing strategy, the main question to be answered is what does the business try to achieve? Starting from this point, you can, build your path for the long-term perspective or better short-term to avoid too many pivots from the initial goals.

Set the north star to guide your team in their daily activities but do not put strict limits. Ideally, the marketing team should review the current situation and company results at least on a quarterly basis. Remember, business is supposed to be dynamic since the environment and consumer interests are constantly changing. Sometimes it is important to take a risk and bring the changes into the company.

Reassess marketing contracts, tools, and subscriptions

It would be wise to eliminate some useless or overpriced marketing tools and subscriptions by replacing them with more effective alternatives to save money. Train marketing team to run more activities in-house and work more efficiently. You can review and access the marketing channels used in the last months and evaluate their costs and effectiveness to conclude the prudence of the marketing budget.

The same would have to be done with other intermediaries. Try to negotiate new contract conditions with a media agency. As a rule, media agencies work under a certain percentage of the marketing budget, often around 20-50%. This amount can be saved and contributed towards campaigns by moving to SaaS solutions for programmatic ads.

If you would like to learn other solutions, this article can help: Programmatic In-House: Build or Move with SaaS?

There are different SaaS solutions and Adello.Direct is one of them. The main benefits of SaaS are simplicity, usability, and the possibility to target, set up, and monitor the marketing/advertising campaigns in a much cheaper and convenient fashion.

Set new Budget

Set up and stick to your budget. Remember: the budget should serve the marketing strategy and not the other way around.

It is time to choose more effective and efficient methods of advertisement and give it a try to jump into 2022 fully armed and prepared.

Don’t expect overnight magic

You would have to be ready that every action of the marketing team will work for the brand in a long-term perspective, and it takes time to see the results.

It can be compared with body health improvement: Eating healthy for one week can barely bring any results. In order to change the body shape and improve wellbeing, one would have to eat healthily and do sports regularly for months or even years.

Same with marketing. The investment has an accumulation effect. The notions like customer loyalty and trust may take time to build up. The client database will also grow gradually, and later the conversion can be increased.

Undoubtedly, it is time-consuming and requires patience, but in the future, the results can grow exponentially. A crisis is not a reason to cut off your marketing budget for a short-term cash win. Indeed, it could be a time for revision of the current strategy.

The relevance of marketing methods comes in the first place, which can be a better alternative than reducing spending. Think about how cutting the budget can negatively influence your brand and your customers and how the rivals can celebrate it.

Change the strategy, reflect on what can be improved, remove non-essential expenses. Invest in a long-term perspective and see your business growing.

If you need some advice from the marketing experts, Adello is always ready to help!

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