To make better marketing budget decisions, listen to what your business data can tell you. Here are tips to get started.
In their book Sexy Little Numbers (Ogilvy & Mather with Crown Business, a division of Random House Inc., 2012), Dimitri Maex and Paul B. Brown explain ways to use data analysis to help grow your business. In the edited excerpt below, they take a data-driven approach to explaining why it can make sense to increase marketing budgets during an economic downturn.
When economic insecurity grips the world, the first question marketers often ask is, “How much do I need to spend on marketing right now?” In truth, they usually put it more like this: “How much can I cut my marketing budget?!?”
There has been some analysis of this question, but most of the thinking is decades old. The most common approach to answering it was to compare the financial performance of companies that cut their advertising budgets during a recession to those who held their spending stable or even increased it. This methodology was first examined in the 1920s by Roland S. Vaile, and published in the Harvard Business Review in April 1927. Vaile compared companies that maintained their advertising spending during the 1923 recession to those that cut their budgets. He found that the biggest sales increases were recorded by companies that advertised the most. Vaile’s research has been repeated during just about every recession ever since, and the results are always the same: Companies that cut their budgets during a recession performed worse during that recession and also in the subsequent years of recovery.
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