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Despite inflation and cost concerns, a majority of small businesses (68%) are increasing marketing spend. This reflects their inherent resilience and the understanding that they cannot 'save their way to growth.' They recognize that investing in marketing is crucial for retaining hard-won customers and telling their story in a tough economy.
Instead of demanding a large budget upfront, CMOs should partner with the CFO on a pragmatic, step-by-step journey. At e.l.f. Cosmetics, the marketing budget grew from 6% to 24% of net revenue over six years by proving the ROI of each incremental increase, building a strong case for continued investment over time.
IPA database analysis reveals a stark truth: budget size is the single most important marketing decision. Effectiveness is overwhelmingly determined by spend (90%), with creative and media efficiency accounting for only 10%. The biggest lever you can pull is the budget itself.
To avoid constant battles over unproven ideas, proactively allocate 5-10% of the marketing budget to a line item officially called "Marketing Experiments." Frame it to the CFO as a necessary fund for exploring new channels before current ones tap out and for seizing unforeseen opportunities.
A study of 110 CMOs reveals a direct correlation between growth and marketing spend. High-growth firms (over 6% YoY revenue growth) invest substantially more—about 35%—in their marketing budgets, challenging the common practice of cutting marketing during economic uncertainty.
Marketers often separate brand and performance, cutting brand spend first during budget constraints. However, since 95% of B2B buyers aren't currently in-market, top-of-funnel brand building is crucial for warming leads and ensuring performance marketing can succeed long-term.
The fastest way to increase revenue and profit during a recession is by creating new, irresistible offers for existing customers. They already know and trust you, which eliminates customer acquisition costs and dramatically improves profit margins compared to chasing new leads.
To achieve significant growth (over 10%), contractors should allocate 10-12% of their target revenue goal to marketing, not a percentage of last year's actual revenue. This forward-looking investment is scary but necessary to fund the growth you want to achieve, rather than just sustaining current levels.
Constant Contact CEO Frank Vella reveals a paradox: while SMBs are increasing their marketing spend, their confidence in its effectiveness has plummeted. This isn't due to a lack of effort, but rather an overwhelming number of tools and a fundamental inability to measure ROI. Only 18% of SMBs feel confident in their marketing, a significant drop from the previous year, highlighting a critical gap between investment and perceived results.
During economic downturns, competitors retreat and cut discretionary spending. This is the precise moment to increase marketing efforts. Organic social media content creation costs $0, making it the perfect offensive strategy to gain market share from defensive, fearful rivals.
In turbulent economic times, leadership often cuts marketing first. However, marketing is the lifeblood of an organization, driving revenue and reputation. Data shows that increased marketing investment during downturns leads to greater returns and long-term growth.