Marketing budgets: how to do more with less

How do marketers navigate working with smaller marketing budgets?

Topics: Industry trends, Reporting

Gartner’s report, The State of Marketing Budgets and Strategy 2022 found that, while marketing budgets have climbed from 6.4% of company revenue in 2021 to 9.5% in 2022, they still lag behind pre-pandemic spending.

While budgets have somewhat recovered, businesses now face more challenges. Firstly, you have to adjust marketing strategies to reflect changing customer behaviors in a post-lockdown world. How will they interact with a brand? What drives the decision-making process? Where and when will they convert?

But marketers are also facing great uncertainty as economies worldwide become increasingly unstable. How will this affect customer behavior and spending? What will it mean for your business?

As you enter another period of uncertainty and instability, marketers are already finding themselves under greater scrutiny. And, with that comes greater scrutiny of marketing budgets.

Declining budgets and rising expectations

Marketers face the greatest business challenge of all: getting maximum value out of every customer interaction whilst delivering engaging and inspiring experiences that foster loyalty.

As businesses continue to recover from the pandemic, the need for growth is paramount. Businesses need new and returning customers to help keep them afloat. That need is exacerbated as we approach what looks like another recession.

Unfortunately, at the same time business uncertainty often leads to increased marketing cuts. To marketers this seems like a clear contradiction – how can businesses expect to grow if they are not investing in marketing?

Still, marketing decision-makers are left scrambling, adjusting plans, and adapting strategies to allow for shrinking marketing budgets. At the same time, expectations for revenue and market share growth have not changed. Marketers are simply being asked to do more with less.

Why are marketing budgets being cut?

Marketing is a frequently underestimated business function. When the focus is set on sales, profits, and growth, external stakeholders can often lose sight of the role marketing plays.

Effective marketing – marketing that generates high-quality leads and inspires repeat customers to spend more money – is not easy. Sadly, not everyone agrees. Many people simply consider the role of the marketing team to be email sending and posting on social media. They don’t understand the considerations that go into every decision and every word you use.

During the pandemic, budgets were cut back due to a mixture of cost-saving measures and because certain marketing activities were put on hold. But still, you survived. Now, it is your survival that has become your undoing.

Marketers are well versed with the expression ‘use it or lose it’.

Coming in under budget is not a virtue in the marketing world. Failing to spend your whole marketing budget can have 2 major implications for your team.

You fail to hit targets which results in the credibility of you and your team coming into question
You hit your targets which gives budget holders the misconception that you don’t need it and therefore reduce your budget for the next financial year.

Recent limited marketing budgets and the hard work and dedication of your marketing team have led many finance budget decision makers to get the wrong impression that you don’t require as much as you once did. As you ramp back up to pre-pandemic capacity, budgets are failing to catch up to demand.

Instead, they’ve been reassigned.

Digital transformation

Over the past few years, your business’s ability to function online has been the factor determining success or failure. Marketing budgets that were once assigned to offline marketing or in-person events were re-invested into digital transformation programs.

According to research by EY, 44% of corporate companies are making good progress with their transformation programs.

What is digital transformation?

Digital transformation is the integration of digital technology into all areas of your business. Ultimately, it will change how you operate and deliver value to customers. Simultaneously, it involves a significant cultural change for organizations.

Businesses need to be continuously challenging the status quo, experimenting with new technologies and ways of working, and becoming comfortable with failure if something doesn’t work out.

Allocating marketing budgets

Digital transformation programs present a unique opportunity for marketers. Marketers must stake a claim in digital transformation programs today if they have not already done so. In the same report by EY, only 4% of corporations claimed to have a “highly sophisticated” approach to leveraging data.

If there’s anything a marketer knows, it’s the importance of data.

At a time when budgets are being cut, think wisely and align your technology needs of the business. Marketers need to maximize spending by capitalizing on existing investments in digital and data transformation programs.

As a marketer, you need a platform that can deliver results while saving you time and improving efficiency. All-in-one marketing platforms can do that and more, extending value beyond marketing teams.

With the ability to unite data from multiple, disparate sources and communicate with customers on multiple channels, modern marketing platforms like Dotdigital are perfect for marketing, sales, and customer service teams (to name just a few).

Better access to and use of data across all teams in your business is beneficial to all.

Benefits of all-in-one marketing platforms

Create consistent customer journeys
Allow sales teams to discover customer interest and needs
List ItemInform customer service teams about customer history
Help IT and Digital Transformation team identify UX areas for improvement
Provide feedback on products and services to instruct new product development
Improve organization-wide communications

Marketers are facing great uncertainty as economies worldwide become increasingly unstable. How will this affect customer behavior and spending and what will it mean for your business?

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How to do more with less

Budgets are not the only area where marketing leaders are feeling the pinch. 58% of CMOs reported that they lack the in-house capabilities to deliver their strategies. This goes beyond technology as spending on in-house labor has remained static over the past few years.

In all areas, marketing decision makers are having to find ways to do more with less all around. Here are a couple of our top tips to do just that.

Align your goals with those of your CDO or CIO. Forming these alliances will help you get the investment you need for your marketing team as they can use digital marketing KPIs to measure the effectiveness of their digital transformation programs.
Economize your marketing spend by tapping into existing digital transformation programs. Focus on marketing use cases that emphasize the potential for revenue growth in technology that provides real-time analytics, personalization, and hyper-targeting capabilities.
Make data capture a priority. Zero-party and first-party data are essential. Ensure you’re collecting it at every touchpoint to build customer-centric lifecycle automations that save time and generate revenue.
Use customer insights such as eRFM to identify high-value customers and sales opportunities. This will focus efforts on customers most likely to convert, therefore improving the efficiency of your marketing team.
Focus on customer lifetime value (CLV) to demonstrate the monetary worth of your BAU marketing activity that inspires loyalty as well as sales.

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