Thinking of cutting marketing this year? What the evidence says

It’s a reasonable instinct. Marketing is a cost you can switch off on Monday, and nobody can point to the sale that disappears as a result. Payroll is painful and rent is fixed. Marketing is a line in a spreadsheet.

The trouble is that the effects don’t show up when you cut. They show up a year later, when the pipeline’s thinner and nobody can say why.

What happens to brands that go quiet

Sales don’t fall off a cliff. They slide, and they keep sliding.

Researchers at the Ehrenberg-Bass Institute looked at twenty years of data on brands that stopped advertising for a year or more. On average, sales were down 16% after one year, 25% after two and 36% after three (Hartnett and colleagues, Journal of Advertising Research, 2021).

Getting it back takes longer than losing it. In a model presented at an IPA seminar in 2008, a brand that cut its advertising to zero for a year took five years for sales to recover. Halving the budget instead took three.

Both are studies of consumer brands. That matters, and we’ll come to it.

What the research shows about downturns

The firms that keep showing up while competitors go quiet tend to come out bigger.

Peter Field has spent years analysing the IPA’s database of effectiveness case studies. Looking back at the 2008 to 2009 recession, he found that brands which kept their share of voice more than 8 points above their share of market grew market share by 4.5% a year on average. Brands with share of voice at or below their market share grew by 1% (Field, 2020).

The reason is simple. When competitors cut, every pound you keep spending buys a bigger share of attention. Field’s rule of thumb is that for every 10 points your share of voice runs above your market share, you can expect about one point of market share growth a year.

It isn’t free. Holding spend usually costs some profit during the downturn. The payoff comes in the recovery.

Why B2B is different, and where it isn’t

B2B buyers buy rarely. That makes going quiet riskier, not safer.

At any one time, very few of your future clients are looking. Professor John Dawes of the Ehrenberg-Bass Institute estimates that only about 5% of B2B buyers are in the market at any one time. The other 95% will buy later, from whoever they remember (Dawes, for LinkedIn’s B2B Institute, 2021).

So most of the marketing you do now is for buyers who aren’t ready yet. Cut it, and nothing happens this quarter. The damage shows when those buyers come into the market and you’re not on their list.

B2B is different in other ways too. Sales cycles are longer, there are fewer buyers, and relationships do a lot of the work. Most of the downturn evidence comes from consumer brands, so treat the exact numbers as a guide, not a forecast. The direction is consistent, though. Les Binet and Peter Field’s research for the B2B Institute found the same principles of growth apply in B2B: invest in share of voice, balance brand building with short-term activation, and reach beyond the buyers you already have.

What to cut and what to protect

The answer isn’t “spend the same on everything”. It’s knowing which part is working.

Cut:

• Activity nobody can tie to a result. The campaign from last year nobody switched off. The sponsorship that gets renewed because it always has been.
• Things you do because competitors do. If it doesn’t reach your priority audiences, it’s a cost, not an investment.
• Volume for its own sake. Ten average posts a month won’t do what two good ones would.

Protect:

• Being known by buyers who aren’t looking yet. That’s the 95%, and it’s the slowest thing to rebuild.
• Your website. It’s the one place you own, and where buyers and AI tools go to check you out. If it doesn’t convert, fix that before you cut what sends people to it.
• The thinking. Your positioning is what makes every remaining pound work harder. Cutting the strategy and keeping the activity is the wrong way round.

If you can’t tell which list something belongs on, that’s the real problem. It isn’t a budget problem. It’s a measurement one.

How to show the board it’s working

The board isn’t really asking you to spend less. It’s asking you to show the spend is worth it.

• Set a baseline now. Enquiries, win rate, how often you’re shortlisted, average deal size. Whatever you choose, write down where you are today.
• Judge the two jobs differently. Brand building pays back over a year or more. Activation pays back in weeks. Judging brand on last month’s leads is how it gets cut.
• Report on one page, every quarter. The baseline next to each number, and what you’ve stopped as well as what you’ve done.
• Get the data in one place. If it takes someone a day to build the report, you’ll only ever see it once a quarter.

If you need to make the case for keeping what works, our business case framework puts the costs, the risk of doing nothing and the measures on one page.

Sources

• Hartnett, N., Beal, V., Kennedy, R., Sharp, B. and Gelzinis, A. (2021) When brands go dark: examining sales trends when brands stop broad-reach advertising for long periods. Journal of Advertising Research, 61(3). Australian alcohol brands, 1996 to 2015.
• IPA (2008) Advertising in a downturn: a report of key findings from an IPA seminar. Includes the Data2Decisions recovery model and Peter Field’s share of voice rule of thumb.
• Field, P. (2020) Advertising in a downturn revisited, presentation of analysis for LinkedIn. Mainly consumer IPA case studies from 2008 to 2009.
• Weinberg, P. and Lombardo, J. (2021) The 95:5 rule is the new 60:40 rule, Marketing Week, on research by Professor John Dawes, Ehrenberg-Bass Institute.
• Binet, L. and Field, P. for the B2B Institute. The five principles of growth in B2B marketing.