David Fish: Why marketing budget cuts highlight the need to better communicate value

By David Fish, strategic communication specialist and founder of No Two Fish.

As consumer confidence wavers, and doom and gloom headlines dominate most global and local news outlets, even the best and most seasoned marketer can find themselves in a budget tussle with a CFO.

Marketing budgets stand out like the proverbial sore thumb as one of the most significant spending lines, and when times are tough they are historically one of the easiest to cut. And even if not considered an immediate requirement, a case is often made that making cuts now is a prudent measure to protect against ‘what might come next’.

All the signs are telling us that budgets are already under pressure. In July, Interpublic lowered annual growth expectations and posted a fall in quarterly revenue stating that clients in the technology sector had slashed marketing budgets. The advertising group’s shares then went down more than 12%. Simultaneously in the US, Omnicom posted weak earnings for the quarter, and nearer home, research conducted for The Australian by SMI shows that the banks have been pulling back on home loan advertising in the face of rising interest rates, down 12.5% for the three months to June 30.

A fall in budgets is just an outward signifier of a much bigger change. Behind the scenes, there are other factors at play that can significantly impact both client-agency relationships and the effectiveness of the work during these times. Increased scrutiny can also mean reduced sign-off levels, as well as more eyes pouring over activity that might have been considered a given previously.

What sits on the client’s mind is not who wins the rating war, or how audiences are shifting between platforms. What really keeps them awake at night is how they can protect their team from headcount reductions, deliver effective campaigns with less, and amplify the importance of marketing – all the while demonstrating to the business that the work of this team matters and will deliver commercial outcomes.

Understanding this concept is just the beginning. There now needs to be a much greater focus on demonstrating value, while ensuring that ideas, solutions and campaigns can travel easily within the organisation. With more stakeholders to onboard, simplifying the pitch becomes ever more critical.

Many think of value too simplistically: looking for savings and getting more for less. This singular approach presents several issues, the first being that it can set new benchmarks. What was once intended as a one-off to make ends meet, can become the norm against which you are now measured. It also misses the opportunity for creativity, exploring new ideas with partners and innovating.

Embracing some creative tension to leverage the constraint of a smaller budget can yield greater short- and long-term outcomes than the inevitable strained relationship that remains after a protracted negotiation leaving one side feeling short changed.

However, the more significant issue is that this ‘more-for-less’ approach can overshadow the fact that the client’s investment is being used to solve something that matters.

The focus must centre on how this activity delivers value back to the business as an essential part of the strategy, and how without this, a status quo is the very best hope. But at worse, there is a real risk of missed growth opportunities. Now is a critical time to understand how a clients business works, how it generates revenue, the challenges it is facing and where your work can solve specific problems.

This focus is married with the need to tell a precise, succinct and simple story. As your content moves deeper into the organisation, further away from specialists towards those looking more broadly at how the business is performing – with the power to control financial levers – a simplicity of narrative ensures your ideas and their value are easily explained. Your job is to curate content so that anyone can present it, and the importance impossible to miss.

Everything should circle back to the problem you are solving for the business and the benefit of this investment. It should be abundantly clear why this activity matters, and why it matters now.

When in any doubt, ask yourself if your narrative can survive the ultimate budget-killing question: ‘What is the impact if we don’t do this?’

As belts continue to tighten and more questions are asked of even the most routine activity, sharpening how we communicate value and structuring content into a compelling and strategic story is more critical than ever. Companies are still spending, it is just a question of where that money goes. The only aspect you can control is how you position yourself and your ideas, and what you bring to the table beyond saving a few dollars or cutting a better deal.

David Fish is a strategic communication specialist, founder of No Two Fish and author of What it Takes to Create Winning Presentations (Publish Central, $39.95). Visit www.davidfish.com.au