Defending your marketing budget in 2023
With a recession looming, marketing budgets are at risk. What can you do to protect your budget? Top CMOs have some ideas.
It’s rough sledding out there for CPGs. Signs of a recession have households tightening their belts and driving down demand. At the same time, energy costs and supply chain issues have driven up manufacturers’ wholesale costs by 35%.
Facing pressure on the top and bottom lines, many CPGs are looking for costs savings wherever they can, even in areas once considered untouchable like the marketing budget.
Data is essential to protect marketing budgets, but CPGs fall behind retail and other industries in collecting and using it. In today’s economic environment, they need to catch up fast.
No time for marketing theories
Any marketer could point to dozens of research papers and articles that warn against budget cuts. “Short term thinking impairs brand equity” and “only strong brands win in recessions” are common titles.
The research is right – you shouldn’t cut marketing budgets in a downturn. If anything, increase them to steal share of voice from others who shortsightedly go silent.
The problem is that when cannon balls are flying overhead, no one has time for academic theories. They need proof that two things are happening:- The marketing team is optimizing every dollar it spends
- You can draw a straight line from the marketing budget to the profitability it brings in the accounting system
If you can’t prove these points with battlefield speed and urgency, your marketing budget may end up like Robert Duvall in “The Godfather”: dismissed because he wasn’t a “wartime consigliere.”
Marketing optimization depends on data
In a less volatile time, it would be easy to think big picture about how to build this marketing transparency and optimization. The solution would be centered in data – gathering more of it, and doing more with what you have.
It would probably involve some variation of these steps:- Building a unified record for consumer data with all the first-party sources you have access to, including site visits, apps, commerce, social media, marketplace ratings and reviews. Enriching records with third-party data from data brokers and shared data in clean rooms.
- Leveraging a customer data platform to ingest the data, manage identity and consent, and clean the data, with connectors to all consumer engagement channels
- Creating and utilizing relevant segmentation for hyper-personalized consumer engagement
- Tracking performance and prioritizing consumer engagements that deliver the most revenue and profitability
A great example of a successful customer data platform implementation is Ferrara candy, which created unified consumer profiles that resulted in 20% greater conversion rates in their engagement campaigns.
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CPGs: Start small to bridge the data gap
But despite the promise of unified consumer data, therein lies the trap of CPG data procrastination.
Marketers know they need it – 69% said first-party data was essential to their strategy. Yet with everything else on their plates, many of these same leaders would still say it sounds too complicated and expensive. And they’d stick with the status quo – trying to do things faster or working more hours.
But data-driven marketing doesn’t have to be a huge, lengthy IT project. It can be kicked off quickly with a single brand or a single market to prove its value.
And it can be done under stressful, adverse market conditions. Many of the great military technology breakthroughs that were decisive in the outcome of a war were hashed out while the conflict was under way: cracking of the Enigma code, development of the P-51 Mustang, and more.
If you can’t completely revamp your entire system of consumer engagement to prove marketing’s value and indispensability, at least carve out part of your business to show how to do it properly.
First-party data primer: Why you should create customer profiles, STAT
Third party cookies are slated to end after 2022. If you haven't already launched a marketing strategy fueled by data-rich customer profiles, it's time to get moving.
Through the downturn and beyond
Leveraging a CDP to defend your CPG marketing budget internally can be a game-changer for getting through a tough economy.
And when the eventual economic recovery arrives, you’ll be in better shape than competitors who chose not only to cut their media budget, but also put off the underpinning data investment required to maximize performance.
