Marketing during an economic downturn requires efficiency and effectiveness to be baked into every marketing activity. With the aftershock of the pandemic, most marketers would agree that nothing is certain about today’s customers or markets. Consumer preferences have changed dramatically, technology has accelerated the entry of new competitors, and many marketing teams are having trouble executing an omnichannel strategy—now exacerbated by slashed marketing budgets.
These marketing budgets made an easy target for cost-cutting because, for most businesses, marketing is the second largest cost item after people and IT. Now more than ever, marketers have an increased responsibility to determine and improve marketing ROI of each marketing activity. Because of the economic uncertainty ahead, many CMOs have been asked to do more with less.
It is clear that the biggest challenge facing CMOs right now is proving marketing ROI to the business…against the economic backdrop.Sharon McGuir, SVP of Business Development & Growth at SGKInc.
The real problem isn’t just the amount of money that is spent, but the certainty with which marketing programs can consistently bring in genuine benefits to the company. In other words, if your marketing teams can’t quantify their marketing’s value to your higher management, they’ll have a hard time acquiring the funds they seek.
The good news is that great marketing doesn’t necessarily have to cost more money—rather, smart, data-driven strategies can help you make the most of your current resources. With the recent decline in optimism and concerns of an impending recession, it’s now more crucial than ever to be mindful of how you’re spending your budget.
According to The CMO Survey, marketing spend is forecasted to drop 15.38% in the next 12 months. In these trying times, leveraging data to drive greater relevance in customer interactions, measuring results to optimize your spend continuously, and pruning non-paying channels is the way forward.
These days, to cope with crises, it’s more important than ever to be able to manage information, and that’s where data comes into play. It’s not only about using data to cope with crises but ideally to survive them and thrive in their aftermath. Coping with crises means making the best use of data.Tim Race, senior VP of narrative and thought leadership at PR firm Method Communications
What Does Having a Higher Marketing ROI Mean?
Tim Parkin, global marketing advisor and president of Parkin Consulting, summarizes the idea succinctly.
The key to maximizing your budget is spending it a bit at a time and making real-time judgments about where it will have the biggest impact. A marketing budget becomes obsolete the minute it gets approved. The budget bottleneck by Tim Parkin
Continuing along that line of thought, I believe three key elements to improve marketing ROI are:
Choosing Data Over Guesswork/Intuition
A classic scene observed during a recession is that customers shift their priorities and reduce their spending. In such cases, the dynamics of the market and ever-changing consumer preferences can only be assessed and acted upon accurately when you have data to chart their behaviors.
Choosing data over guesswork or intuition is about choosing discipline—you are zeroing in on allocating your resources, time, and efforts to their highest and best use.
Cutting budgets, especially marketing, is not a silver bullet that will solve all your problems. Rather, efficiency is the name of the game – businesses can prepare best for a recession by making sure they are as efficient as possible with the money they have.Harriet Durnford-Smith, CMO, of Adverity.
Democratized Access to Campaign Effectiveness
Improving marketing ROI isn’t just about producing tangible results; it’s about people as well—the very people committed to making your marketing activities a success.
When you set up an accessible yet comprehensive reporting system to gauge your campaign success or the funnel breakdown (or any other relevant metrics), you empower more participation and make room for creative decision-making. Not only does democratized access to integrated marketing data help keep more people informed, but it also provides them access points into understanding how well their individual tasks fit into the bigger picture.
CMOs and team leaders can realize long-term benefits and count on the fact that all marketers are working with the right information and that information and analysis are based on current, integrated data and measurable results. Alignment streamlines communications and brings fewer frustrations to the process, leading to a higher ROI.
Real-time Corrective Action
Increasing return on marketing investment (ROMI) means measuring every important aspect of your campaign execution in real-time and taking corrective action right away. It involves:
- Monitoring the performance of campaigns by tapping across all data sources.
- Analyzing each campaign’s or funnel’s substages to gain insight into the variables influencing performance within each phase.
Real-time insights into channel performance and funnel breakdown metrics allow you to listen and react immediately to user signals. You can also update customer profiles in real-time for ongoing engagement or adjust your spends across channels dynamically as needed.
The Path to Improve Marketing ROI
With agency fees rising, client budgets getting cut, and ad spending declining, it’s no surprise that marketing departments are feeling the pinch. According to the Standard Media Index Core Release, advertisement spend has decreased by 5% from last year, primarily due to economic difficulties and macroeconomic conditions that have caused marketers to review their spending decisions more closely.
The following tips can help you manage your marketing budget without losing profitability:
Focus on What Matters Most
With softening returns and increasing pressures to drive financial outcomes, creating a lasting impact can feel especially daunting for marketers. This is where a reliance on first principles can help.
One of the most important things marketers can do today is focusing on what matters most (clichéd advice, but it works). This can mean:
- Cutting costly contracts
- Investing in cost-efficient tech
- Prioritizing spends on high-performing, proven channels
- Transitioning to in-house marketing to ensure the best utilization of resources
Every marketer understands that there’s no such thing as an “unlimited” marketing budget; there are only certain areas where spending more will yield better results than others (maybe social media). Think about how each dollar spent may affect different parts of your business or customer base, as well as whether your current marketing plans address critical business needs and goals at various levels.
Switch to Targeted and Value-Based Marketing Campaigns
If you try to be all things to all people, you won’t be anything to anybody.
Unlike mass marketing, which operates in broadcast mode, targeted or hyper-targeted marketing is centered on knowing the consumer, providing intended value, and connecting with them in a meaningful way. Now is the time to adjust your targeting strategy so that you only reach your ideal audience or niche within your overall audience. When you reach your ideal audience, you’re more likely to get results. It’s really that simple.
Many reports say it costs five times more to acquire a new customer than it does to retain an existing one. While this holds true, I believe a more important question to ask in these times is whether your customer retention and acquisition strategies are capable of driving any long-term customer value. If not, you should seriously consider making smart investments in nurturing existing customer relationships, with the aim of increasing overall lifetime value and returns.
Measure Marketing Impact Effectively and Identify Underperforming Initiatives
Every data-savvy marketer knows that the right performance metrics are key to a business’s success. These metrics can help guide and improve your strategy, as well as act as an early warning system if projections seem to be veering off course.
I like to think of marketing metrics as a compass needle for your marketing strategy. In the uncharted waters of a recession, if you are not course-correcting your marketing programs, you may find yourself treading water or, worse, rerunning failed campaigns in the hopes that they will work better this time.
More now than ever before, marketers must know their arsenal—the different reports and tools they have at their disposal. They must understand the math of their marketing activities holistically and be able to see results across the full funnel.
Not sure of where to begin or how to properly track your progress? Here are some industry-wide integrated reports that you can use.
By tracking campaign progress, CMOs can monitor gains or losses in brand perceptions during advertising campaigns, current events, or competitive pressures. This helps them assess the impact of these events in the marketplace and helps them stay informed on how their brand is connecting with customers. Customer insights every CMO should have: Forsta
A campaign report details the progress of a running campaign. It usually contains information about key performance indicators (KPIs) such as leads, sales, web traffic, and conversion rates. Campaign reports are fundamental to marketers because they allow them to measure the effectiveness of their ongoing campaigns and make decisions about which ones to continue running and which ones to terminate.
Using campaign reports, your marketing teams can:
- Identify which channels or ads are the most and least successful.
- Use this information to optimize campaigns on the fly.
- Analyze what went wrong with the unsuccessful campaigns and try to correct them.
- Celebrate successful campaigns and learn from them to continue achieving success.
In these uncertain times, doing funnel analysis helps your marketing understand and find points where users drop significantly more relative to their expectations.John Ozuysal, Co-founder & CMO at Datapad
A funnel analysis report helps you identify the different stages of your customer’s purchasing journey to know what’s working and what isn’t. Using such reports, you can do conversion optimization (CO) and design your offers and promotions specifically for those users who are likely to convert.
The idea behind funnel analytics is simple: you want to know where your customers are going after they click on an ad before they even purchase anything from your website. The goal is to create a path for them from one stage in your sales funnel to another and improve the purchase cycle so your customers will have less difficulty moving through each step of the funnel.
With funnel analytics in place, your marketers can:
- Identify the steps in the conversion process that are causing the most conversion losses.
- Determine which marketing channels are sending the most traffic to the website.
- Identify which pages on the website are converting the most visitors into customers.
360-degree Customer Views
81% of businesses state that generating a 360-degree view of the customer to better understand intent and context will have a high impact on their ROI over the next two years. 451’s Research’s Voice of the Enterprise: Digital Pulse, Coronavirus Flash Survey
A 360-degree customer view is a comprehensive view of all the interactions a customer has had with a company, both online and offline. This view helps companies understand who their customers are, what they want, and how they can best serve them.
The importance of a 360-degree customer view for marketers cannot be overstated. With this data, marketers can:
- Segment their customers based on interests and behavior.
- Create more personalized marketing messages.
- Identify which channels are most effective at reaching certain segments of customers.
- Predict what products or services certain customers are likely to buy.
Marketing Mix Modeling
Marketing mix modeling can highlight those activities with the highest ROI at the same time that it flags the ones that are likely to show negative or mediocre returns. Marketing by Numbers, Accenture
Marketing mix modeling is a process that helps marketers understand how different marketing channels interact with each other. It does this by estimating the impact that each marketing channel has on cost and overall sales. This information is then used to create a “mix” or combination of marketing channels that is most likely to result in the desired level of sales.
Marketing mix modeling is important for two main reasons:
- It allows marketers to measure the effectiveness of their current marketing mix and make changes if necessary.
- It provides insights into which channels are most effective at driving sales and which ones need more investment.
The customer expects so much more than just a seamless digital transaction. Now that companies have their personal data, they want anticipatory, personalized experiences across the entire customer journey.Carla Hassan, CMO of Citi
Attribution modeling is the process of assigning value to each conversion path leading up to a sale. This helps marketers understand which channels and touchpoints are most valuable, so they can concentrate their efforts on the ones that are most effective.
Through the use of attribution modeling, marketers can:
- Adjust their marketing efforts towards high-income channels and touchpoints.
- Understand which channels are most effective at reaching different segments of customers.
- Predict which marketing channels will be most effective in the future.
Website Analytics Reports
A website analytics report provides insights into how people interact with your website. These reports help you answer questions such as how long people stay on your site (session duration), which pages they visit (page visit), and where they came from before landing on your site (traffic by source or device).
Marketers who are aware of these metrics can make wiser choices and upgrade their websites to serve customer needs better. They can:
- Identify which pages on the website convert the most visitors into customers.
- Recognize which marketing channels are sending the most traffic to the website.
- Understand what kind of content and campaigns are engaging customers better.
The specific type of marketing analytics reporting solution you use will be contingent on your organization’s needs. With that said, a few key things to consider while making this decision are:
- Size and complexity of your organization
- Type of data that is being collected
- Goals of your organization
- Budget and resources available to your marketing teams
- Skill level of the team members who will be using the tools
Marketers often say that intuition, experience, and judgment play a big role in their marketing allocation decisions. While these elements are still important for the planning and execution of a marketing campaign, they cannot, by themselves, guarantee a high and reliable rate of return on the marketing investment. What marketers need to rely on today is data.
In times of uncertainty where businesses are struggling to deal with cash flows, supply chain issues, reduced ad spends, and a hyper-competitive market, the most natural thing to do would be to contain costs to stay afloat. But fortunately, success in marketing doesn’t have to correlate with the size of your budget. Marketing in a recession is all about optimizing what has been working, using integrated analytics to unlock insights, and increasing ROI from there.
The ultimate goal should be to eventually embed an ROI mindset, system, and process into the overall marketing infrastructure to help ensure success in both the short and long term.