During companies evaluation, downsizing or cutting cost, marketing budgets is usually the first to hit the chopping block in the first quarter. The event that happened between 2017 and 2018 reality, where key production firms were cutting costs and breaking ties with most of their marketing agencies are still fresh in our minds.
The antics of Unilever and P&G resulted in a downward slide in the industry, which meant employment could no longer match the cost of graduates looking for jobs. It would also affect agencies and their relationship with clients.
Who suffers the most when budgets get cut?
When firms cut costs, the ideal thing to do is to strategize on the way forward. But it cannot be done in isolation if the investment is to reap the rewards. That is where the expertise of agencies coming in because they can contribute towards brand awareness and recognition. This task is beneficial to both parties as well.
Cutting costs has an adverse effect on the firm’s revenue as in the case of Blue Apron holdings that slashed marketing cost by 43%. In the next quarter, shares and customer’s patronage were dwindling.
Such is the state of the business and why other companies should be careful in towing that line. Unfortunately, leaders and executives still find marketing as a dispensable tool rather than an asset. They also do not appreciate the amount of talent at their disposal because if they do, they will be aware of the advancement of computerized tools like smart Bots and others that help give clients wrong information about the marketing process. That is if they are looking for an automated process. They also expect skilled staff to be cut to save costs, meaning it requires fewer people for highly skilled work like strategizing, idea formulation, etc.
At some point, cost-saving can be vital for a firm, but it has to be done more subtly instead of an aggressive approach. Hoping that things turn out right following an automated process, will only lead to the firm’s downfall in the end.
Using computers isn’t the only answer.
When clients don’t understand why you need an extra pair of hands, it becomes difficult for them to support the campaign. Using computers is excellent, but it is not going to work on his own. People are needed to formulate strategies to collect and analyze data by finding good patterns. Higher supervision will require additional helping hands which drive the cost. Add that to the growing demand for marketing and management graduates with a data scientist that can work wonders with prediction tools.
Depending on creativity alone to push your brand to the top is like shooting yourself in the foot. No matter how smart the outline and execution might look, the smart thing to do is to carry it out with a budget and a reveal prediction tool. Any brand that skips this process for short term gains will lose loyal customers and prospective clients down the line. Value marketing as an asset and treat it as such.
Maintaining budget limitations
If agencies and clients neglect their streams of revenue which is their audience and customers to pursue budgets limitation, they will pay for it – by missing out on the main point. The agency might feel clients aren’t paying enough for their services while clients are not getting the satisfaction of using their services. In this scenario, nobody wins.
Brands that want to do better with their audience and clients should follow these three steps.
Point out the budget from the start
When it comes to money, the agencies are the last people that want a stumbling block later. It is better to get it out of the way. Every salient point and gray areas should be ironed out before proceeding. Getting your cheque first calms the nerves and allows for better concentration in bringing out quality outputs.
Frequent your gatherings for immense discussions
Every financial team lays back as soon as the contract lines are dotted. Probably when we find them next is when they want to ascertain if agencies met a threshold. When both parties are heavily invested in the project; nothing stops them from holding meetings to keep each other on their toes. If 62% of clients believed they struggle with partners and 72% of agencies find it hard working together, it might be the perfect time to hold regular meetings. It will help spot gray areas that need fixing before they escalate.
Clearly state your return on investment
If you go into a business without an idea of what you are going to get out of it, it can be a problem. It is not the time to start to adjust budgets or deadlines to suit you. It is vital to put the ROI in perspective so that you can work towards a goal while making expenses from your pocket. When you have work, it comes with a lot of responsibility which is leadership is excellent.
Today, brands are looking for ways to drive up their profits and optimize their value but not with agencies with a track record for failure.