When the MD asks “how to cut marketing expenses” – what to do

It is that dreaded sentence again.

Normally it’s a case of the FD or MD showing that PowerPoint slide of how the company’s expenses have increased way above inflation.

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They normally go on to say that all of the expense are unavoidable and thus the marketing budget must be cut by 40%. Now nobody likes to hear it, but it happens. It’s often the result of a few things going wrong in marketing:

  • The FD/MD doesn’t understand marketing
  • They don’t see the link between marketing budget and results
  • Marketing is unable to link spend with results
  • Marketing is unable or not given an opportunity to report results

Now if we assume results are tied to spend which they generally are then the marketer is indeed in a tight spot. So, how to cut marketing expenses then?

The options are to:

  • Pull back on print – at the cost of less exposure
  • Pull back on radio – at the cost of less exposure
  • Pull back on eventing – at the cost of less exposure
  • Pull back on AdWords – at the cost of less exposure and clicks

But this conundrum of less spend equals less results points to the problem that: you need to increase efficiency in your marketing.

8 Types of waste
For some points to help with a quick fix, have a look at the eight types of waste mentioned in this post. (As part of a different discussion but also relevant here.)
Looking at the eight wastes which the lean movement developed and the reasons mentioned above on why you’re getting your budget cut will help you cut back on some wasted spend. Chances are that you will ironically start cutting the mediums which don’t measure and report the results they are responsible for attaining. You could also call your suppliers in and give them the squeeze… maybe cutting 5%? But you won’t get the big change you need without impacting results.

Greater efficiency
Improvement in efficiency – to the extend required in this example is still possible but we must zoom out a bit to see it. Your next efficiency step-change is driven by the fact that the way we buy has changed.

People research online before they buy. Your marketing approach needs to adapt to this. To increase efficiency you need to:

  1. Measure results to enable you to cut out guess work
  2. Leverage and scale your spend
  3. Stop thinking like an advertiser and think more like a marketer

Shifting your spend toward digital marketing online will improve your ability to measure results and make educated decisions. But it won’t solve point 2 and 3 above. You need to move to Inbound Marketing and content marketing which among many other things, creates a constantly growing net of pages to pull leads in. It can also fulfil portions of the sales cycle saving your sales team time, which will over time increase your efficiency.
Inbound marketing is a digital solution and as such the results are not tied as closely to ad spend, it is massively scalable from the same spend.

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