One of the biggest issues we’re helping our clients tackle right now is how to think about their marketing budget and in-market activities amidst the COVID-19 crisis. Revenue is falling and with no clarity around when this crisis might end, businesses are scrambling to adjust and ride out the storm.
In such ambiguous times, a delicate balance exists between cutting budgets and activities in the short-term to weather the crisis and pulling back so heavily that your business canâ€™t come back. Weâ€™ll explore how to assess this juggling act so that you can make decisions that will allow your business to thrive once the crisis is over.
APPLYING THE TORTILLA CHIP RULE TO MARKETING SPEND
One good way to think about when to market is to think about tortilla chips. No, seriously. Bear with us!
Think about walking through a grocery store in late November. You might have pumpkin filling, turkey, potatoes, and other Thanksgiving-oriented goods. But what are the chances that tortilla chips made it on your shopping list? Slim to none. Late November is not a time for tortilla chips!
Now, letâ€™s say it was early May, right before Cinco de Mayo. Now what are the chances that tortilla chips made your shopping list? A heckuva lot higher.
Tortilla chips brands know this, and they heavily invest in marketing throughout April with TV ads and in-store promotions so that when you go to buy chips, you buy their brand. However, come November, their marketing budgets and activities are very quiet.
This scenario applies in just about any industry. Go big on marketing campaigns and budgets when you have a good chance of actually bringing in customers. But, if you know the chances are nearly non-existent then itâ€™s a bad time to spend money. Applied to the COVID-19 crisis, this means pull back discretionary spend if you are in a product or service category that people are less likely to buy when working from home or concerned about their finances. However, if you are in a category that aligns well with home preparation, illness prevention, and enabling virtual connections now might be just the time to start spending.
BALANCING THE SHORT-TERM WITH THE LONG TERM
If you are one of those organizations that thrives during crisis situations, you can stop reading now.
If you are like most every other business, you are concerned. Very, very concerned. And, chances are, you may have thought at some point in the past few days, â€œpull back on all marketing activities.â€ Yet, doing a complete 180 can hurt you in the long term. Any general awareness youâ€™ve built up over time may be completely lost. Meanwhile competitors who are still engaging in some marketing may start winning the mind share that you used to own. In sum, you may find that at the end of this crisis, youâ€™re not back to business as usual but rather back to the early days when your business was young and struggling to keep the lights on.
Thatâ€™s why, as hard as it sounds, moderation is so key at this point in time. When others are scrambling and pulling back completely, you have an opportunity to wisely adjust activities so that you donâ€™t lose the traction youâ€™ve builtâ€¦and you donâ€™t go out of business either.
WHAT TO CUTâ€¦AND WHAT TO KEEP
So, now comes the hard part. What do you turn off, and what to you make sure stays on.
We recommend falling back on the three classic types of marketing channelsâ€”Owned, Earned, and Paidâ€”to identify what you can most afford to stop doing, and what you should keep on doing to ride out this crisis.
Paid Marketing Thatâ€™s Easy To Turn On & Off: Activities that fall into this category would be things like Google Ads and Facebook Ads or Lead Gen channels like Yelp and Home Advisor. Said another way, these are paid activities that offer self-serve platforms where you can easily switch the activities, and therefore spend, on and off. Because itâ€™s so easy to turn them back on, thereâ€™s little harm in the short-term of turning them off. They represent a very quick, easy way to pull back on spend.
Paid Marketing Thatâ€™s Harder To Ramp Up: Some paid activities are a bit harder to get up and running or benefit from long-term in-market runs. The former category includes many offline activities like radio and print advertising which frequently have clauses to prevent competitor activities. The latter involves activities like recurring sponsorships of e-newsletters and podcasts. They represent serious chunks of marketing budget so should be looked at early on. However, you should do so only after understanding that you may lose some ground that your long-term investments have made.
Earned Marketing: This marketing category includes activities that you earn as a result of focused efforts. You donâ€™t completely control them, but you can influence them. This includes items like SEO, PR, and customer referrals. Staying top of mind matters, and these channels do a great job of that. Of course, during crisis situations, people are less likely to search for your product and journalists are less likely to write about you (assuming youâ€™re not in the business of creating or preventing the crisis) so they arenâ€™t as beneficial. Further, these are activities where you may be leveraging freelancers or third parties and therefore cutting into cash reserves. While these arenâ€™t the first things weâ€™d turn off, they arenâ€™t the last either.
Owned Marketing: Last but not least is Owned marketing which includes things like social media and email marketing that you 100% control. While these certainly cost you time and possibly someoneâ€™s salary, they do not require incremental spend. These channels are fantastic, cost-effective ways to stay top of mind and relevant with prospects and past customers, even when it might not be the right time to buy. During emergency situations, when every last cent matters, these are the activities you want to be sure stay on.
We wonâ€™t pretend the COVID-19 crisis isnâ€™t going to be hard for all businesses. It will. The question remains how can businesses adjust their day-to-days to survive. Shoring up spend in certain categories while investing in cost-effective marketing channels is a great way to do just that.