This post originally appeared on Entrepreneur.com - #Growing Your Business
5 min read
Opinions expressed by Entrepreneur contributors are their own.
Not even the most well-prepared businesses have the resources to hunker down and wait out a months-long crisis. Stop investing in marketing, though, and your company won’t make it through the long night of the coronavirus pandemic. The only way to survive is to keep pushing forward.
Investing in your business is easier said than done, especially in times of financial hardship. According to the U.S. Chamber of Commerce, nearly a quarter of all small businesses in the country have already shut down temporarily. If the situation doesn’t improve substantially, 43 percent of small businesses expect to close permanently by October. The outlook for tech startups and even mid- or large-sized businesses is no clearer.
The country won’t return to normal before the landscape of business is changed forever and we see unknown changes for our most loved brands, as well as losses of double-digit percentages of small businesses. To avoid joining that number, you must make the most of every dollar in your budget — especially your marketing budget. Consumers have plenty of time to pay attention in quarantine, but with unemployment on the rise, businesses are competing for far fewer dollars than they were in 2019. Buyers will only spend their money on products and services they’re really compelled to purchase and those they need and trust.
Earn your place as a necessity and a trusted brand, without spending money you don’t have, by following these marketing budget tips.
Intelligently recalibrate your budget to account for new realities
The marketing budget you set at the beginning of the year no longer reflects reality. Even if you managed to hit your sales projections in the first quarter, increased restrictions and a tanking economy will dramatically impact income through at least Q3 2020, and most likely longer.
Don’t use this opportunity to divert funding from your marketing channels into operations. While marketing spend usually takes up a large chunk of overall expenses, your marketing also accounts for most of your revenue. People stuck in their homes spend more time in the digital world. Although they may not buy as many products, they still only buy from the brands that communicate with them.
Look beyond dollar amounts, and think more in terms of percentages. If you expected marketing spend to take up 18 percent of your budget, project your numbers for the next month and spend 18 percent of that total on marketing. While this does mean spending fewer actual dollars on marketing, your percentage of company spending will remain consistent, putting you in the best possible position to remain solvent without abandoning your customers.
Pay for performance, not for the brand
Impressions don’t always translate to sales. In this devolving economy, the businesses that attempt to reach the most customers with brand messaging in the hopes they’ll remain top of mind will run out of money quickly. People won’t remember one of the many brand campaigns they see at the moment as they try to handle the unknown. Preserve your budget and maximize your impact by focusing your dollars in areas where you can pay for actual performance.
Performance video is the way to go with consumers turning to digital media while stuck at home. These user-centric video ads allow you to reach your customers in a unique way by focusing on diverse personas. The key is tuning in to your consumer demographics to really maximize conversions and ROI, not just shares and likes. TubeScience, a company that specializes in performance-video marketing, researched changes in consumer behavior since the beginning of the COVID-19 pandemic to learn more.
According to that research, CPMs have fallen 40 percent from this time last year, while thumbstop (three-second views and impressions) and conversion rates have also fallen. TubeScience attributes theses changes to increased price consciousness and scarcity priorities among consumers. To adapt, TubeScience recommends businesses invest in validating consumer research at least weekly and reduce complexity to allow for faster content generation. The key is creating content that leverages emerging behaviors to resonate with, and convert, consumers.
Double down on winners, and increase experimentation
In good times, businesses can afford to continue investing in middling marketing channels. Diversification allows brands to bolster their presence, even when specific channels don’t lead to outstanding results. During economic downturns, however, the value of diversification shrinks compared to an all-or-nothing strategy.
Divert money away from all but your top performing channels, and consider where consumers are going — to digital channels. You can maintain a limited presence on middling channels, but spend as little as possible to do so. Double down on your top performers, and continue to monitor your ROI from week to week. Expect a notable dip in returns, even in your best channels, because of the economy. Scaling doesn’t always translate directly to more money.
Use the remainder of your budget to insulate your business from stagnation by running regular marketing experiments. In normal situations, you should keep at least 10 percent of your marketing budget available to test new channels and strategies. When you optimize your budget for an all-or-nothing approach, you may find that number increasing to 20 percent or more as the other 80 percent goes toward a small number of proven performers. Glenmont Consulting, for one, cautions companies to run only marketing experiments that provide measurable data about relevant audience segments.
The COVID-19 pandemic will end one day, but companies that fail to optimize their budgets in the meantime won’t survive to see the sunrise. Make the most of your marketing budget during these hard times, and use the lessons you learn to inform your strategy when the winds finally shift.