In a fluctuating economic landscape, businesses are adopting cautious strategies, often reducing costs—starting with marketing budgets. A December 2022 survey of nearly three dozen CMOs from leading North American consumer companies revealed an average 8% cut in marketing spending, with some facing reductions of up to 20%. One major public company even slashed its marketing budget by over 20%. Striking the right balance between cost efficiency and maintaining a strong marketing presence is essential for long-term success.
Marketing should be at the table, but not be the meal
Over the past three years, marketers have navigated shifting consumer behaviors and rising costs. Economic uncertainty has driven 80% of consumers to adjust their shopping habits—choosing smaller pack sizes, switching brands, or seeking more affordable retailers, as revealed in our March 2023 survey. Meanwhile, marketing costs have surged, with the average cost per click increasing by 20% in 2022, according to our December survey of CMOs.
The investor approach to marketing
During economic downturns, marketing leaders often implement uniform budget cuts, but this approach raises concerns about sustaining growth. Our December survey found that two out of three respondents were unsure about reducing spending while outperforming competitors. A better strategy is to adopt an investor mindset—cutting inefficiencies while reinvesting savings into high-ROI initiatives. By reallocating resources wisely, companies can achieve 10-20% cost savings and drive 5-10% growth, creating a strong competitive advantage.
“While it’s tempting to pull back, we believe that companies that double down on growth will not only rebound faster but will also emerge stronger as a result. “
How to get started: A call to action for CMOs
Despite economic uncertainty, this year presents a crucial opportunity for marketers to drive growth through efficiency gains and strategic investments. While some companies may retreat, those that prioritize growth initiatives will recover faster and emerge stronger. For CMOs and marketing leaders, this is a defining moment to sharpen their focus and set a clear agenda for long-term success.
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This strategic reallocation of resources can help companies create a significant competitive advantage.