Why do most companies cut marketing budgets first? I think it’s a big error. If we changed who does the cutting in the chain of command, maybe the “cuts” would make more sense. If those responsible for them examined the true effects that such cuts have on an organization’s growth, the current thinking might change. Let’s start with the Commander-in-Chief –the customers. The customer makes the decision to buy your product, whether that purchase is repeated is another story, but the fact that your product or service was purchased, is the result of a long series of decisions. The decision to reduce an idea to paper, to build the idea, finance the development, getting legal opinions, examine the distribution options, to make pricing decisions, and a host of other decisions must be made before one dollar has been eared! This progression is backwards because no one has considered the most important of all decisions, the moment of truth. Someone finally asks the question: “how are we going to sell it”? Then someone suggests, “maybe we should let the good folks in marketing know about our little gem of an idea.”
Fast forward a couple of years. The marketing department has done its job of packaging a combination of pricing and perception that works. Then they figured out where the most logical prospects for the company’s product live and what they read, view, and listen to. Then they presented the product in the most favorable light, and presto, the dollars, marks, yen, and so on come rolling in. Now this is good because all the bean counters in accounting are relying on these sales to finance their little lots in paradise (and perhaps the nearest shoreline). All the paranoid skitz-a-holics in legal need the billable hours, and god knows that everyone at the C-level needs year-over-year increases to justify their positions. Now everyone is happy. Then one day, in a totally unrelated industry, a couple double talking Armani suits trip on their own greed and bankrupt their 150-year old golden goose. Unfortunately, the goose’s golden eggs have turned everyone’s meal ticket into a #!?>! sandwich. Next thing you know, everyone in the chain of command is calling for every department to cut, cut, cut. Then, right on cue, all the C’s in Bloatsville declare, “We’ll start with marketing”!
It matters not that marketing is driving the sales, not accounting, nor legal. It also matters not that every research paper ever published on the subject proves that companies that continue to market in lean times always emerge better off than those who do not.
So the question remains: why would conscientious companies cut marketing before other non-revenue producing activities? Is it because it is just so easy to cancel a broadcast flight, pull a sponsorship, stop production, or reduce the quality of web or collateral materials …or is it that management has been so lax with regard to measuring the real effects of every marketing dollar that they don’t know the size of the nose that they are cutting to spite their future. I think it’s the latter.
Admittedly, measurement in the marketing game is complicated at best. I always thought that sales volume was the panacea for all that ails a company, but it is different now. We now have the tools in place to measure the combined effort of a world more and more driven by a Web 2.0 economy.
John Wanamaker, the father of modern advertising once said, “I know that half of my advertising dollars are wasted, the problem is, I don’t know which half.” Almost a hundred years have passed since then. To all the companies that think that cutting their “life line” to the commanders-in-chief should think again. Institute hardcore measurement devices and you will also think twice about cutting off the company function that supports everyone.
