WATCH: Cutting marketing budgets during a recession is a bad idea

Businesses worldwide are dealing with economic volatility – an environment very difficult to navigate. In the UK, the US, and some areas of Europe, the recession is top of mind for senior leaders. Brand marketers and P&L owners are facing unprecedented challenges. Inflation, supply chain disruption, and the after-effects of Covid are just some of the contributing factors that are seeing marketing budgets getting cut.

While all of this is a reality for many teams, one high-growth SaaS company is convinced that cutting marketing budgets during a recession is a bad idea.

Greg Dolan, chief executive of KeenDS, managed a brand portfolio through 2008 without tools or software. Reliant on legacy tools, he tried to make inferences about what to do next.

Without real-time decision support, he made the call to reduce media investment and redeploy funds to trade. Not only did this strategy fail, but it also weakened the businesses’ position when the market began to recover.

In a recent video with Click Z, Dolan stressed that working through such an uncertain time brought him invaluable insights and knowledge that he now uses to guide his decision-making when the market seems uncertain or volatile.

“The kneejerk reaction is to cut what is not measurable, so the go-to during difficult times is to cut marketing and move funds over to trade and price promote,” he says.

“That has been done during previous recessions. No recession looks the same, with this one there are several things going on geopolitically, social unrest, the aftereffects of the pandemic and these things need to be accounted for when marketers make decisions.”

Dolan notes that if teams are unable to contextualise the external environment, decisions that are not beneficial for a brand are likely to be made which causes harm.

Keen has developed the industry’s first and only decision optimisation software which is designed to incorporate external challenges and model solutions around them that suit a business’s needs, all the while showing marketing’s ongoing impact on a business.

Keen often starts by showing clients what happens if you stop marketing: usually, volumes are going to decay over time, and this will likely cost corporations twice as much to re-enter the market.

“We can quantify in our systems that the brands who maintain some level of spending will be at a competitive advantage when the economy gets better but it’s about finding the right amount of spend in the right areas to sustain the business”, says Dolan.

INDEX

01:00 How Keen DS was born

04:18 How the current economic factors will challenge marketing departments

07:18 How do clients benefit from using Keen software as a solution

11:54 How do companies do with implementing automation solutions

18:28 What does the future hold for Keen DS

20:17 Who is Keen DS best suited for

23:17 How different will the industry look post the recession