Cutting Marketing & PR Budgets in a Crisis (You Need to Know What is Working First)

March 12, 2020
5:00 min read
Laura Browne
Cutting Marketing & PR Budgets in a Crisis (You Need to Know What is Working First)
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With a looming recession dominating the news cycle, managing budgets in a crisis is becoming a major topic of conversation. Marketing and PR budgets are often the first to be slashed. This is often to the detriment of the long term health of a company. People start to make decisions based on gut feel, fear and assumptions rather than using data and evidence to inform action.

Times like these are when a solid marketing and communications measurement program comes into its own. Having a system in place that provides evidence of the success of your programs, and quantifies return on investment, enables you to make strategic decisions on what to stop doing, and more importantly what to do more of.

Why Cutting Marketing and PR Budgets is Precisely the Wrong Thing to Do

There have been a number of studies that demonstrate the advantages of at least maintaining budgets during a weaker economy or crisis. In fact, marketers that increase spending increase sales and market share during the crisis and afterwards. In the 1990-91 recession, Pizza Hut and Taco Bell exploited that McDonald’s dropped its marketing budget. As a result, Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28% (Forbes).In contrast, companies who cut their marketing during an economic downturn, because they believe no one will be buying, are actually jeopardizing their long-term market share. Consistent and persistent marketing is the only kind that is truly effective.

Make Marketing & PR Budget Decisions on Fact Not Assumptions

“Strategic uncertainty can feel like slogging through mud. Leaders avoid investments. Decisions are deferred. Resources are frozen. Fear, uncertainty, and doubt drive bad behavior and personal agendas. Even so, companies often succeed or fail based on their managers’ ability to move the organization forward precisely at times when the path ahead is hazy”. (HBR article: Managing when the future is unclear).

Using data and metrics to evaluate whether a marketing campaign has had the desired impact, removes subjectivity when justifying budgets. If you have prescribed what success will look like in advance, and pre-agreed with all stakeholders and budget decision-makers what metrics will  be adequate to demonstrate progress to goal, it is much easier to justify changes in spend. This is easier though, for online marketing channels, where it is relatively simple to link activity to sales. If you are investing in a PR and comms strategy, measurement becomes even more critical.

Why Measuring PR Needs to be a Particular Focus

PR and comms teams have a harder time justifying budget spend versus digital marketing. In a world where return on investment is measured by direct impact on sales, PR often gets kicked to the curb. In a crisis, such as COVID-19, PR really comes into its own, so being able to quantify impact and report it effectively is critical. Tactics such as agreeing a quality store for coverage in advance, tying results to organization objectives and doing pre and post campaign surveys provide you the data needed to evaluate media effectiveness, and justify budget increase.

Before you start cutting budgets in a panic, ask yourself is this decision made on data or fear? If you don’t have the data to hand, then the first thing you must do is instigate an effective measurement program. This will give you the tools you need to make an informed decision on budget spend, and justify it to the board.