Let’s be honest, budgeting isn’t always fun.

It’s a reminder your resources are limited — a reality no one wants to confront. But it is necessary. And in the face of a poor economic climate, it becomes an even more important aspect of running a business.
 
When times are tough, investing in marketing can feel anything but enticing. But that could just make the difference between your business simply surviving and actually thriving.
 
So, how do you overcome the temptation to scrimp? Let’s get started. 

Insight: Investing in a strategic marketing plan makes the difference between stagnation and exponential business growth.

Data: In 2024, marketing budgets surged across most industries, with some more than doubling their allocations from 2023. (HubSpot)

Key Action Point: Adopt the Zero-Based Budgeting method to help determine the right amount to spend on your business’s marketing budget.

The Impact of Marketing, or Lack Thereof 

In the face of stagflation, throwing in the towel—at least where marketing’s concerned—isn’t the best idea. Without it, your brand’s voice is drowned out by the noise of your competitors.
 
When consumers are tightening their belts, promoting your brand may seem counterproductive. But it’s important to stay positive, as poor marketing efforts can lead to:

• Reduced visibility – Your target audience is less likely to see or hear about your products or services.
• Loss of market share – Competitors who continue to invest in marketing might capture the attention of your existing customers.
• Missed opportunities – The chance to capitalise on changing consumer behaviours or emerging trends that could benefit your business can pass you by.
• Longer recovery period – Scaling back your marketing efforts might impact momentum and extend your post-recession recovery period.
• Brand erosion – Your brand's identity in the minds of consumers weakens, making it harder to rebuild that perception later on.
• Decreased customer engagement – Neglecting existing customers reduces repeat business and customer loyalty.
• Missed audience insights – You cut access to valuable insights into your audience's needs, preferences, and behaviours.
• Diminished innovation – You stifle your ability to develop new ideas and address challenges.

Investing in a results-based marketing strategy can help your business weather the storm and position it for growth when the economy recovers.

Could Zero-Based Budgeting be the Answer?

While taking bold marketing steps during economic uncertainty is encouraged, it's important to proceed cautiously.
 
Before setting a budget on marketing, consider your options and possible outcomes carefully. This is where Zero-Based Budgeting (ZBB) comes in.
 
ZBB aims to help organisations practise fiscal responsibility and reduce costs. Here’s a simplified version of the process:

1. Starting from scratch. At the start of a new budgeting cycle, the organisation starts with a clean slate or from zero.
   
   
2. Planning, evaluation, and allocation. The organisation’s departments conduct thorough research, layout plans, and set goals to justify their budget requests.
   
   
3. Approval, coordination, and rollout. Once team budgets are approved, the processes are streamlined and communicated.

Traditional budgeting usually involves using the previous year’s budget and making incremental adjustments. Considering this, the ZBB method may seem more tedious since you start the entire process from scratch. That being said, its possible benefits to your business are indispensable, and they include the following:

Fosters accountability and due diligence. 
Due to the justification component, plans are ironed out, and every decision becomes intentional.

Allows resources to be invested in more profitable ventures. 
Misallocating funds and overinflated budgets are avoided since every expense will be accounted for immediately.

Aligns and clearly defines business goals.
Coordination and communication are key so teams know which areas to prioritise.

Getting Back on Track

Even if you decide to invest big in your marketing, when the economic prospects are bleak, you want to make the most of your investments.
 
Here are some ways to help your business supercharge your marketing while making the most of the resources available:

1. Get your pricing right

More than just assigning numbers to products or services, pricing is a delicate balance of several factors that determine:

• How customers perceive your offerings.
• How you compare against competitors.
• How your offerings contribute to your revenue and profitability.

During challenging times, when consumer spending tightens, and choices are scrutinised, pricing becomes a powerful tool for influencing buying decisions.

2. Think like an investor

Every decision has the power to shape your brand's trajectory. If there’s a choice you have to make, it’s adopting an investment mindset for your marketing. Here are the best areas to invest energy and resources in:

• Extra Share of Voice (ESOV) – ESOV ensures your voice stands out in a noisy playing field. It's a ratio thing – how much you're shouting (your ads) versus how much space you're taking up (your market share). Even if you're adopting the zero-dollar marketing approach, keeping your ESOV strong is like being the life of the party. Don't just join the conversation; make sure you're the talk of the town.
  
  
• Zero-Dollar Marketing – This isn't about being stingy. It's about using free stuff like social media, user-generated content, giveaways, and word-of-mouth to spread the word. Free stuff can be seriously powerful. Zero-dollar marketing is about getting people excited about your brand without cracking open the piggy bank.
  
  
•  Cruising vs. Conquering – Imagine you're on a boat. Spending 4% to 7% of your revenue on marketing is like keeping a steady course – you're floating along but not making waves. Now, if you're looking to kick things up a notch, that's where spending around 13% to 17% comes in. It's like launching that rocket and watching your brand soar.

As markets evolve, attention spans shorten, and competition intensifies, simply viewing your marketing budget as an expense can leave you behind. Marketing is not just about spending money. It's about investing in smart moves.

3. Consider the competition

Keeping an eye on your competition's budget strategies is like a compass guiding your decisions. It provides insights into what's working and what isn't. Here’s how to navigate that:

• Monitor competitor moves – Consider where your company earnings are and what next year’s goals for revenue look like. You also need to consider the marketing avenues that are working the hardest for you. Then, apply these questions when assessing the competition.
  
  
• Flexibility in budgeting – Be ready to adjust your budget strategy according to shifts in market demand and consumer behaviour. This is where Zero-Based Budgeting comes in handy.

You also want to see how much your industry spends on its marketing on average as a benchmark.

Source: HubSpot | Marketing Budget: How Much Should Your Team Spend in 2024? [By Industry]

• Adapt to stay relevant – As your competition adapts, so should you. Continuously evaluate and innovate your marketing approach to maintain a competitive edge.

The key here is to keep your pulse on the current business landscape to outspend and outsmart the competition.

4. Get your data in order

Before finalising your marketing budget, review your marketing analytics. Data gives you an objective, factual report on where your marketing efforts are working and where they need improvement.
 
This is where key metrics come in. Be sure to define your Measures that Matter and carefully plan how to obtain and qualify reliable data to inform your marketing. Then, organise them in an accessible and easy-to-use dashboard to track progress.
As you go through your data reports, you need to answer the following questions for each marketing channel you utilise:

• Did our advertisements reach our intended audiences?
• Once we reached our target audience, did they respond to our call to action?
• What percentage of new clients did our marketing efforts obtain?
• What percentage of clients did we retain through marketing efforts?

You need to distinguish the ROI of individual marketing channel expenses. This information will help you structure a plan moving forward to maximise costs in the areas where your marketing efforts are successful.

5. Target your expenses

With your data and a clear idea of your business growth goals for the next year, the next question to answer is, “How should marketing funds be distributed?”

Deloitte breaks down average expenses:

• 57.9% of the total marketing budget is spent on digital marketing
• 44% of digital marketing budgets go to paid media
• 34.4% is spent on owned media
• 11.2% is spent on earned media (11.2%). The remainder goes to digital marketing activities outside of paid, owned, and earned media.
• CMOs expect to spend 9.6% more on branding and 6.8% more on CRM.

This gives you an idea of which marketing aspect will see more or less saturation. Instead of blindly following the crowd, you want to link your expenses to the unique results you’re trying to drive. RAMM is a results-first approach to marketing that we use with our clients. Here’s how:

From there, you’re able to identify must-win and quick-win areas while cutting out low-value tactics and improving your resource allocation.

Tying It Together

With a shaky economy and the uncertainties of life, it’s easy to think about playing it safe. But running a thriving business involves taking calculated risks. Thankfully, tools like the Zero-Based Budgeting method are available to help you make informed decisions, so cutting corners isn’t your first option.

Remember that your marketing budget can shape your brand's success. Neglect it, and you risk stagnation. Nurture it, and you open doors to exponential growth. By understanding pricing's role, embracing an investment mindset, staying attuned to the competition, and leveraging data-driven insights, you can strategically allocate your marketing budget.

Ultimately, marketing isn't just an expense. It's an investment in your brand’s future that has the potential to yield positive returns.