Strategy+Design

“Stopping advertising to save money is like stopping a watch to save time.” 

Henry Ford

With this current business landscape, many B2B companies are under pressure to cut costs wherever they can. Unfortunately, one area where companies often look to save money is in their marketing budgets. While it may seem like a good idea to reduce marketing spend to increase profits, cost-cutting on marketing can actually be detrimental to B2B companies in the long run. Here’s why.

Marketing is Essential for business growth. First and foremost, it cannot be overstated, marketing IS essential for growth. Without effective marketing, it can be difficult for a company to attract new customers, generate leads, and close deals. A strong and efficient marketing strategy can help B2B companies build brand awareness, establish thought leadership, and drive revenue growth. Reducing marketing spend,  means that companies are essentially limiting their ability to grow and compete in the marketplace. In essence, since it’s known that other companies might try to cut costs, it makes sense to increase the commitment to growth to fill the void possibly left by other companies.

Marketing Helps B2B Companies Stand Out:

In a competitive marketplace, it can be difficult for companies to stand out from the competition. Effective marketing can help companies differentiate themselves from competitors and create a unique position. By reducing marketing spend, companies are essentially limiting their ability to stake a leadership position or communicate their unique value proposition and set themselves apart from the competition.

Through social media, email campaigns, webinars, and other marketing channels, B2B companies can engage with their customers and build stronger relationships. But if they cut marketing, companies are essentially limiting their ability to connect with their customers and stay top-of-mind

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Cost-cutting on marketing may seem like a good idea in the short term, but it can be detrimental to companies in the long run. The proof, according to two Oregon State professors, is in the data. A study by K.D. Frankenberger and R. Graham, published in 2003, looked at the performance of 2,662 companies based on whether they increased or cut advertising spending during recessionary periods. The authors determined that increased advertising during a downturn gives companies, “a firm asset by contributing to financial performance for up to three years” after the recession is over. The study noted that boosting advertising during a recession also enhanced the benefits of increasing advertising during nonrecessionary times. For public companies, there was the added benefit of higher share prices.

For our partners, we insist that instead of reducing marketing spend, companies should focus on optimizing their marketing strategy to drive growth, engage with customers, stand out from the competition, and generate leads. By taking the time to identify where the spend can be best utilized during this phase of the business cycle, companies can build a strong foundation for long-term success when the business cycle changes again.

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