During times of economic downturn, such as the one Nigeria’s currently experiencing, businesses are frequently forced to make tough choices when it comes to cutting back on costs. Unfortunately, marketing is often among the first cost items to be cut. While the reasons for cutting back on marketing as a whole are understandable, doing so could potentially cause detrimental damage to the business in the long run.
In fact, there’s a strong case to be made that, rather than making wholesale cuts, organisations could aim to reallocate spending to suit the current economic climate while also driving efficiency and adapting to changing consumer behaviours. And that, in turn, could mean putting an increased focus on digital marketing. Doing so comes with several advantages. Not only does it minimise the pitfalls that come with cutting back on marketing spend (including lost brand visibility and diminished customer loyalty), but it could also help businesses stand out against competitors who do cut their marketing budgets in a bid to save short term.
But, in order to enjoy these advantages to their fullest extent, organisations have to take the right approach to digital marketing. That includes working with advertising partners who understand the digital landscape as well as the platforms and digital ad products most suitable to each business’s requirements.
Understanding the psychology of cutbacks
Before looking at how businesses can ensure that they get the full benefits of digital marketing, it’s worth getting a clearer understanding of why it’s so often among the first items to be cut in a company budget.
One of the biggest reasons is that cutting back on marketing spend provides immediate savings to the business. That could help the business preserve immediate cash flow in the short term. While that’s not as applicable to digital marketing channels as it is to traditional ones (such as broadcast and outdoor), businesses looking to preserve cash flow and save jobs will try and save anywhere they can.
Additionally, marketing budgets are seen as more flexible compared to fixed costs like salaries or commercial rent. As such, some business owners and executives believe that it’s easier to scale back or eliminate marketing campaigns than it is to make drastic changes to the organisation’s structure.
To add to it, , in a period where business survival is perceived to be more important than growth and expansion, long-term investments like marketing campaigns might take a backseat in favour of short-term cost-cutting measures.
Short-term gains but long-term pain
As understandable as that logic is, the short-term gains made by cutting back on advertising can result in long-term pain for businesses.
Reducing or eliminating marketing efforts during an economic downturn can lead to reduced brand visibility, a loss of market share, and diminished customer loyalty. This, in turn, could make it more challenging for the business to recover once the economic situation improves.
And in an emerging market like Nigeria, that could mean missing out on considerable long-term growth. While the economy might be struggling now – thanks to a combination of volatile exchange rates, the removal of the fuel subsidy, rapidly rising inflation, and global macroeconomic factors – that won’t always be the case.
The country’s expanding youthful population, growing levels of connectivity, and rich natural resources mean that it is primed for long-term growth. In fact, research from Goldman Sachs suggests that Nigeria could have the fifth-largest economy on the globe by 2075.
The businesses that will be best positioned to enjoy the fruits of that growth are the ones that build personalised relationships with their customers and digital marketing remains one of the most efficient ways of doing that.
Use the right partners
But that doesn’t mean that businesses have to adopt a “business-as-usual” approach when it comes to digital marketing. It is, after all, still possible to recognise the importance of maintaining a digital presence while also being aware of the broader economic situation.
Achieving this balance can be a lot easier when businesses choose to work with the right advertising partners. The ideal partner would be able to help a business identify which platforms and formats work best for its business needs. The partner will also be able to help deliver the kind of campaigns that provide the maximum return on the business’s marketing spend.
Businesses should also consider looking for an advertising partner that has an established in-market presence with local on ground expertise. By doing so, the business is more likely to understand and adapt to the shifting economic conditions. It’s additionally important to use an advertising partner that prices transparently, meaning the business knows it’s getting the fairest possible price from the start.
An ongoing investment
Ultimately, then, it should be clear that while cutting digital marketing budgets is understandable, it should never be viewed as desirable. Businesses that choose to keep their advertising during activities running through challenging economic times could potentially come out stronger on the other side. In order to reap maximum benefits, they should consider working with partners who can help them ensure their marketing budgets work as efficiently (and as economically) as possible during uncertain times.