In Downturn, Marketing Budget Cuts Don't Always Make Sense


We executives live with risk, but also work to mitigate it. And these times are riskier than normal. So at first glance it's no wonder that the media industry is bracing for a downturn in advertising.

Conventional wisdom (and a quick review of history) suggests that the marketing budget is the first thing we cut when revenues are under pressure and the future seems dicey. Big mistake. And let me explain why.

(Full disclosure: I am a longtime media executive and some of my company's revenue comes from advertising. But that doesn't make me wrong.)

For most of us our biggest cost center is personnel. Most of us are more than hesitant to reduce costs by cutting people. It hurts. Beyond that, people have become the core asset and differentiator for most companies. So when things tighten up we tend to chop non-personnel costs. And marketing is often a big fat target. Since most execs have "ROI angst" about marketing, there's an additional rationale for canceling ad and marketing campaigns.

Easy doesn't make it right
The fact is most modern businesses rely on marketing for revenue success. Word of mouth only gets you so far, and counting on momentum to outlast a downturn is playing with fire. If you miscalculate – and many do – you are in for a vicious cycle. Less marketing equals lower revenues, which means more cutbacks. Cut your marketing spend again and you risk even lower revenues. Now you're forced to cut more costs–-and probably people--but you're doing it from a lower base, ever closer to the brink.

Ready for the rebound?
And when the economy starts turning around, where are you? On your heels, that's where. Your brand awareness is down, your traffic is down, and you have even fewer resources than when the vicious cycle started. You may have survived, but what about your career? Your company may have survived, but is it prepared to compete after the dust settles?

Instead, why not focus positively on marketing during a downturn, even a bad one like this? This is a good time to rethink your strategies and priorities. Then, pick your battles and concentrate with your strongest weapons (those marketing vehicles with the best ROI.) There are lots of ways to address marketing during a downturn and it's certainly worth rethinking strategy and re-focusing resources.

If you are web-based and need traffic, power up your search engine marketing. If you're brick and mortar and need traffic, focus on outdoor or radio advertising, or whatever provides the best value for your dollar. And if brand awareness is the goal, concentrate on those channels that work best and cut the rest if necessary to gain efficiency.

Take a look at which companies are branding and marketing themselves when you're surfing the Internet, watching TV, or reading the paper. They are working to drive whatever revenue is out there now and they're positioning for the recovery. Think of it as accelerating through the turn.


Erik Sorenson is chief executive officer of, Inc. Mr. Sorenson, 52, oversees the strategic direction of the global, New York-based media company. He is widely regarded as an expert on media strategy and industry trends, with experience spanning radio, local and network broadcast television, cable and syndicated TV, and the Internet. From 1998 through 2004, Mr. Sorenson served as president of the MSNBC cable news channel. He has won more than twenty Emmy awards as a writer, producer, and television executive.

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