Photo credit: The composed Rafael Felisilda
In times of economic uncertainty, marketing spend is usually the first expense to get cut because it’s incredibly easy to adjust a budget or pause entire blocks of campaigns – but should marketing be the first place your business looks to conserve cash or is cutting budget a move that can worsen existing challenges to your business?
Marketing is Even More Important in Downturns
When consumers begin to cut spending and take a harder look at their choices for products and services, that’s the perfect opportunity for marketing to reinforce value propositions to existing customers while prospecting for new ones.
Your existing customers will want reassurance that they’ve made and will continue to make the right decision buying from your brand and new customers need messaging that lets them know they are making the right choice.
Pausing campaigns can have unintended negative consequences far beyond just losing visibility in a market. Keep in mind that almost every ad network/platform now uses machine learning to discover audiences with the best chance of conversion and stopping that flow of data and forcing those campaigns back into a learning phase will severely impact performance when you decide to restart spend.
Leverage Technology to Improve ROI
Many brands still spend large portions of their budget on prospecting campaigns that are often driven only by demographics or simple lookalike lists. These campaigns often have low ROIs but are seen as valuable to the business because they serve as a point of introduction and cast a wide net for brands at an inexpensive CPM/CPC.
Instead of continuing to spend on these “wide net” approaches, take a strategic look at the audiences, behaviors and demographics driving these campaigns and make strategic adjustments to cull underperforming groups or test new ones that can improve ROI. Little adjustments like changing the composition of a lookalike audience or pivoting out of specific demographic combinations can make a big difference.
If You Have to Cut Spend
Should you need to reduce budget, the first place to start will be Google Ads because you’ll be able to use their competitive analytics data to make informed choices on spend reduction.
For any campaign that accounts for at least 5% of budget, look at the last 5-6 complete months of auction insights data and plot who bids on your terms and how that behavior has changed over time. You may see competitors who have gone from having high impression overlaps (their ads were shown on the same searches as your own) to barely being visible and that may open opportunities for lower bid and target adjustments.
For non-brand campaigns you’ll want to take a deeper look at your main keywords and their underlying queries to determine your next steps. Utilize first click attribution as your starting point and look at both keywords and themes that perform well or vice versa.
For branded campaigns, really take a hard look at what you’re bidding on and how competitors are adjusting. Competitor conquest campaigns traditionally have the lowest immediate ROI and if the other players in your space are using ROI as their base metric you may find your branded campaigns as an opportunity to cut.
The second part of that equation is to audit your brand search queries and look at what branded terms are driving clicks. Any terms related to post purchase activity should be excluded as well as terms indicating an already strong preference for the brand.
I realize branded campaigns, for better or worse, are the aggregate ROI driver for marketers but freeing budget to go after people looking at alternatives while keeping costs in check is a scalable strategy that can fuel growth in better economic conditions.
Economic downturns are always stressful and having the right team in place that can assess existing spend and develop strategies to minimize loss of visibility while maximizing value is critical to success. If you haven’t already revisited marketing budget and priorities for Q3/Q4 and beyond, now is the time to do so.