Marketers Are Not Magicians: 6 Ways to Prep for a Downturn

In mid-March 2020, much of the marketing world came to a full stop as most business leaders focused on the organizational challenges of supporting a remote workforce. Advertising paused. Events canceled. Direct mail ceased. Pending deals were delayed. And for 8-12 weeks, marketing stopped driving opportunities into the sales pipeline, the impact of which should be measurable 6-12 months later depending on your sales cycle. It was as clean a test of the impact of marketing budget cuts as you’re likely to find. If you haven’t looked at this data, do so now.  

If for some reason the early pandemic data doesn’t tell the story, then you’ll need to find another way to connect the cause and effect of marketing. Many CMOs already have a model such that they can predict within ±10% accuracy, the impact of marketing activities on the sales pipeline. This means that if they are asked to cut their budgets by XX%, they can accurately predict the corresponding impact on sales accepted opportunities (aka “pipeline”), and ultimately revenue. Don’t have this data or worse yet, don’t know how to get it? Stop reading this and talk with a CMO who does.  

CFOs have few friends during downturns. Before it gets really ugly, set up a regular cadence of budget reviews, educating them on the cause and effect of your marketing initiatives. Help them to understand the levers you pull and the time-frames associated with both planning and the expected impact of each. Get to know their hot buttons. Befriend them by translating what you do into their language and making them part of the experimentation process. More on that in the next point.  

There’s always a chance you could make more with less but you’ll never know if you aren’t running tests all the time. Many enlightened CMOs reserve 10-20% of their budgets for a variety of tests from media channels to partner programs to piloting tools to whatever. The point is that if 80-90% of the budget goes to the proven, that leaves money for experimentation–experiments you can craft with your new friends in finance. Doing that means defining the expected outcome for each test and sharing the results, even the bad ones. 

During our August Huddles on recession planning, several CMOs mentioned an increased interest in partner marketing inside and outside their company. With proper planning and commitment to “win-win” outcomes, partner marketing can stretch budgets, especially if you are trying to enter new geographies or verticals. But finding the right partners and building effective working relationships can take months (if not years) so get started now. 

In my four decades as a marketer, I’ve never heard of a marketing budget going up when revenue went down. It’s practically Newton’s fourth law. This inevitability is inspiring some CMOs to bake in maximum flexibility to their 2023 budgets. Some are avoiding commitments to big events, substituting smaller ones or planning to “go rogue” by sending salespeople and hanging out at their partner’s booths. Some are hiring more freelancers while others avoid new MarTech purchases that have multi-year contracts. One way or another, these marketers are prepared for the worst, eschewing magic wands for detailed budget audits.