How to Manage and Maximize Your Marketing Budget During Times of Economic Uncertainty
Choppy economic waters may push the nervous business owner to slash marketing budgets. Don't jump the gun, though, because there are several more measured approaches one should take first.
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Are you confident that your business can weather a coming recession? Small business owners saw their revenue grow by a staggering 87% in 2022, but profits have dipped by 4%. The reason? Inflation forced businesses to raise spending to cover their operating costs and rise above the competition.
The good news is that your marketing plan can help you gain traction in an uncertain economy. Here's how to manage your marketing budget during an economic downturn.
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Set specific marketing goals
Start by revisiting your overall business strategy. What goals are you trying to achieve through your marketing campaigns? These goals can help you decide what sort of marketing methods you wish to focus on and can also be used to measure the effectiveness of your marketing campaigns.
Many business leaders emphasize the need to set "SMART" goals. These goals are:
For example, a good goal might be to increase customer conversion rates by 15% over the next six months. This goal is specific, measurable and includes a clear time frame, making it easy to determine the success of your marketing efforts.
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Focus on what you can measure
It might be necessary to cut your marketing budget during lean periods, but that doesn't mean you should abandon your advertising strategy altogether. Instead, strategically eliminate marketing costs that have no direct impact.
If you must, start by cutting expenses that aren't directly tied to metrics. For example, it's hard to measure the results of a brand awareness campaign. For the time being, it may be wiser to devote your resources to marketing strategies that have clear, objective goals. When it comes to marketing, spend your time focusing on things like:
- Customer engagements
- Unique website visitors
- Conversion rates
- Bounce rates
- Time spent on site
- Average customer sales
These metrics can help you evaluate the effectiveness of your marketing campaigns, and you can use the data to refine your strategy as you move forward.
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Do your research
How well do you understand the current habits of your target market? Learning how to manage your marketing budget also requires you to understand the cultural trends that will help you get your message across.
During the 2020 pandemic, it seemed only natural to develop a marketing budget that focused on digital ads and social media campaigns. But now that restrictions have eased, your customers might be heading back to in-person events.
You might discover that it's better to shift the money you're spending on Facebook or Google ads to focus more on conferences or trade shows.
Even if your customer base is still thriving on social media, you need to determine the best platforms to reach them. Although Facebook is a broad approach, platforms like Instagram, Snapchat or even TikTok can help you reach younger audiences.
If you do your homework, you can refine your marketing strategy to adapt to customer behavior and get the most out of every dollar you spend.
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Stay on top of your ROI
Every dollar counts. An uncertain economy will force you to be much more deliberate in how you manage your marketing budget. It might be a good time to reevaluate your marketing goals and assess how much each method is costing you.
If you're already relying on solid marketing metrics (see above), you'll have a clear path toward assessing the return on your investment (ROI). For instance, you can look at how much you're spending on your digital advertising and then compare this figure to the click-through rate to see whether the benefits are worth the cost.
This knowledge will allow you to eliminate marketing expenses that aren't giving you clear, measurable results. It will also allow you to reallocate your marketing funds to activities that produce the greatest benefit for your business.
Keep your budget flexible
As you learn how to manage your marketing budget, you'll need to leave yourself enough margin to take advantage of seasonal and/or unexpected opportunities. Setting aside 15% to 20% for creative campaigns can give you the flexibility to adapt to changing circumstances.
In other words, instead of having a rigid marketing budget template, allow yourself some headroom to adapt and change. Your business might pick up during certain seasons of the year, or you might gain access to a new product line that will help you connect with an untapped market.
The point is to have a budget template that allows for some creativity. If you allocate every dollar to your existing marketing strategies, you could be missing out on opportunities that come along later.
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As businesses expand, they face the danger of isolating their components into various "silos" of activity, making it hard to manage a budget across the entire organization. As a result, the company loses efficiency and agility and lacks the data necessary to make decisions that drive the company forward.
Working together as a team can ensure that your marketing goals align with the broader company vision. Smaller businesses can do this quite easily because their small size helps them keep their goals narrow and specific. But any organization can seek input across multiple departments to promote marketing efforts that help the company achieve its goals.
Marketing professionals who work in these larger settings might also need to seek the approval of senior management before executing a marketing plan. This keeps everyone in the organization on the same page about the company's future and the path that you'll take to get there.
Evaluate and adapt
You should be constantly evaluating the success of your marketing plan. If you stick to measurable, achievable goals, then you can use data to drive your decision-making processes and propel your business forward.
But don't forget to stay on top of your data throughout the year. Sure, today you may be able to convert 10% of those who view a Facebook ad into customers. But will that conversion rate stay the same?
Keeping a close eye on your success rates can help you make necessary course corrections based on changes in customer behavior. Constant awareness of change will help you stay in the sweet spot of your marketing efforts.
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Pay attention to the competition
What are your competitors doing during this period of economic uncertainty? Your goal shouldn't be to imitate competing businesses, but competitive analysis can provide a glimpse into how other companies in your industry are weathering the economic storm.
For best results, pay special attention to businesses that share your geographic region or even your target market. This will give you a more accurate picture of how other companies are thriving even as the economy takes a downturn.
Again, your goal shouldn't be to replicate the efforts of your competitors, but observing their methods might help you improve upon their approaches in your own setting.
Stay the course
The good news is that there may be hope on the horizon. Economic experts suggest that inflation rates may normalize sometime between 2023 and 2025. Until then, business owners can expect more of the same, which is why it's important to develop a clear plan for how to manage your marketing budget.
These tips can improve your overall resilience in the face of economic uncertainty, but they're also good strategies regardless of how the economy is performing. Adapting these methods and implementing them in your organization's marketing plan can improve your efficiency and success, helping your business thrive for years to come.
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