Can you pause marketing during a business crisis?
Consider a scenario where a startup, grappling with financial strain, contemplated a substantial cut in operating expenses. The CEO confidently announced, 'Marketing has done an amazing job. We are well known in the market, so we can slash our marketing budget by 90%, take a 12 to 18-month pause, and nobody will notice.'
Putting aside the demoralizing effect, this short-sighted decision to ‘pause’ marketing raised vital questions about the value of marketing and unveiled common misconceptions at the C-level about its far-reaching impact. Despite financial constraints, a dramatic pause in marketing initiatives might spell the beginning of a downward spiral, particularly in B2B enterprises with extended sales cycles. It's worth noting that prudent reductions in marketing spend are feasible without resorting to a complete halt.
Marketing serves two critical functions: brand building and demand generation. From a brand perspective, going dark in the market can be detrimental. A brand's presence acts as a constant reminder to buyers, influencers, existing customers, and investors. It establishes credibility and reaffirms why the business exists, an essential aspect often overlooked in a crowded marketplace where competitors vie for attention.
In fact, Nielsen research has shown that sustained marketing efforts contribute significantly—between 10% and 35%—to a brand's equity. Moreover, a study by the Harvard Business Review revealed that companies sustaining or increasing their marketing during a recession achieved an average growth of 275% in the following five years, surpassing those that reduced their spending.
In the realm of B2B environments, marketing activities don't always synchronize with the stages of a lead's progression through the sales cycle. After buyers recognize the necessity of a specific product or service, there are subsequent phases where they must develop the business case, secure funding, and deliberate on their purchasing options. Marketing's role in maintaining visibility during this crucial period is pivotal, and halting these efforts can markedly affect conversion rates.
Moreover, the absence of marketing activities impacts influencers, existing customers, and potential clients. Influencers, who scrutinize market viability daily, notice such lapses. Existing customers may second-guess their investment in the absence of ongoing brand reinforcement, leading to delayed implementation of existing purchases or a pause on additional investments—all potentially resulting in revenue loss for the company.
From the demand generation perspective, marketing serves as a bridge between prospects and sales, nurturing relationships and providing insights to the product and service. Meaningful client relationship building cannot be achieved with fancy meals or prestigious golf courses; it needs to be fostered through regular, consistent touchpoints across diverse marketing channels. Beyond aiding conversion, demand generation campaigns are crucial for filling the pipeline with new leads. Acquiring fresh leads is usually accomplished through multifaceted marketing programs involving leveraging third-party customer bases and close collaboration between marketing and inside sales teams.
According to McKinsey & Company's June 2023 report, "Beyond belt-tightening: How marketing can drive resiliency during uncertain times," the statement stands out: “During tough times, marketing is often the first to be trimmed, but that’s a shortsighted approach. Instead, companies can invest in marketing as a key to long-term growth.”
This underlines the critical need to recognize the role of marketing in upholding brand presence and driving market demand, highlighting the imperative for sustained investment even during challenging times. Pausing marketing initiatives, especially in crises, demands careful consideration due to its potential business repercussions.