We can all feel it: a new era is starting in the tech scene of Startup Nation. One that is much more focused on making money than on growing. Valuations will come down from their drunken high, and steady but “boring” companies will get their time in the spotlight.
Sure, a lot of companies are still saving up huge war chests (the money they didn’t spend on fancy parties), and they should be able to get through this winter. But for others, now is as good a time as any to reevaluate using a new model based on ARR and cash burn.
Many founders will have to cut costs, and we all know that companies that have to cut costs in times of trouble usually start with marketing.
Wix is a good example of this because, even though they are showing signs of slowing down, they have stepped up their efforts to make money and focusing their cuts on how much they spend on marketing. This is a pattern that will keep happening.
Most of the time, it’s a good idea to cut marketing first, especially since marketing has become more important in the last few years as companies try to grow at all costs. And it could be the right thing to do right now.
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But I’d like to give another point of view, one that I hope will make companies pause and realize that it’s not always the best thing to do. In fact, cutting marketing costs is sometimes like bloodletting, an old-fashioned treatment that seemed good at the time but hurt the patient’s ability to fight illness.
Think about how, in times of crisis like the one we are about to go through, the first thing most companies do is cut their marketing budgets. If you can keep your marketing budget the same during this time, the “noise level” in your product category will drop as competitors cut back on their marketing. This will give your company a bigger share of the market. This is a chance to make your brand known among your competitors, both now and in the future, without spending a dime more.
Think about the fact that when there is a crisis, your customers are also going through a change and may be rethinking how they spend their money. At this point, it’s important to stay with your customers as they go through their own journeys. You can do this by sending them messages, reiterating your value proposition, and maybe even changing the tone of your brand. Your story needs to be changed to fit the way you and your customers are doing financially. It is the job of your marketing team to shape and change your story so that it stays in people’s minds and keeps your customers coming back.
Keeping a high profile during a rough financial time gives the impression that you are strong. It will give your customers a sense of stability and show that you have the leadership to do well. At the same time, when you cut back on marketing, you leave yourself open to competitors who want to fill the gap.
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During these times, it may be less important to make hard marketing cuts and more important to make smarter marketing decisions.
Maybe it’s time to stop hiring outside marketing teams because it might be cheaper to do everything in-house? Maybe it’s time to look at all the marketing tools you use to streamline workflows and get the best results. These tools can be expensive and aren’t as important when times are tough. You might be able to run a campaign to reuse content or cut back on your marketing channels for a while. If you look for them, you can find the plans.
There is no question that marketing budgets need to be cut sometimes. But keep in mind that marketing isn’t like a pause button that you can turn on and off whenever you want. It’s more like an engine that gets stronger as time goes on.
So, before you turn off the power, stop and think about whether it’s the right move for you. Also, remember that marketing during a crisis could be a big chance.