Marketing Budgets with Recession Looming: Seven Ways to Cut Your ‘23 Marketing Budget (Without Cutting Results)
The order just came down from Finance: trim 2023 marketing program budgets by 20%. The marketing executive jokingly thinks, Does this mean my revenue goals also go down 20%?
But with the Fed raising rates again and the probability of a recession in 2023 now at 100% (according to Bloomberg economists Anna Wong and Eliza Winger), the budget-cutting scenario above is becoming all too real for marketing leaders.
We’ve been here before––not too long ago, in fact––so thankfully we have some tricks up our sleeve from last time. This blog is all about sharing ideas and insights to help reduce your marketing spend without having a major impact on your 2023 marketing KPIs.
1. Buh-bye big shows
Everyone cut their event budget when COVID was raging. With the world back open, many companies are going back to spending hundreds of thousands, sometimes >$1M, on large events. How’s that ROI going?
In general, we are hearing that the return on big events is just not there––and in fact smaller, regional, and/or virtual events are just as effective, if not more so, than the big-buck Vegas boondoggles.
Add in the cost of airline tickets, hotels, food, ground transportation, etc., and you can trim 5%–10% of your spend budget by saying buh-bye to the big shows.
Potential savings: 5%–10% of budget.
2. Procrastinating could be good
What did you have in your development plan for large marketing infrastructure expenses in 2023? A new CRM, website redesign, brand refresh? All are nice to have, but generally will not have a material impact on revenue.
Add in the fact that many strategic marketing initiatives, like a marketing automation upgrade or a major data analysis project, usually require an accompanying investment for implementation experts, consultants, trainers, etc.
Many of these initiatives can be pushed out a year without too much impact on marketing KPIs.
Potential savings: 2%–6% of budget.
3. Lose some licenses
How many software licenses do you have for your employees? Any idea of your spend there?
You probably fund software or seat licenses for martech stack, data services, collaboration applications, analyst research/insights, and/or virtual event or meeting platforms––just to name a few. A quick audit may reveal you are paying for licenses that aren’t being used as frequently as you had originally intended––or sometimes not at all. You might even still be paying license fees for employees who are no longer with your company! Either way, just about every organization can get by with fewer licenses and some sharing if needed.
Potential savings: 1%–2% of budget.
4. Nix the non-revenue impacting spend
Whether it’s marketing programs that have a lower return or programs where there may be no revenue return at all (like some advertising, AR, PR, brand campaigns, etc.), do a close inspection of all of them.
In crunch time, most B2B technology firms will prioritize revenue. If you can’t draw a line from marketing activities to revenue (either retaining revenue and/or gaining new revenue), you’re opening yourself to uncomfortable questions from the CFO and CRO.
Potential savings: 1%–3% of budget.
5. Unused POs can be your buried treasure
How many partially filled POs does your marketing department have?
There’s usually a few projects each year that don’t use their entire allocated budget. Could be that the program didn’t pan out, the project champion left, or priorities changed and what sounded great in Q1 (or even in 2022!) isn’t worth continuing. Do you know if the vendor used all the money that was allocated in the PO?
I’m no accountant, but it’s likely you have a few residual POs with vendors that could be canceled and/or the funds redirected to a new initiative in 2023.
Potential savings: <1%–3% of budget.
6. Share your trade-offs with Sales
Establishing a strong relationship with Sales is even more important when budgets and headcount are tight. When you need to cut some programs that will have an impact on revenue, bring Sales into the discussion early and give them choices. For example, ask your Sales counterpart, “Should we cut the regional event, or should we cut the new logo lead program?”
Aside from making them a part of the decision, your sales leader may have a rainy day budget line item or some unused funds that can help co-fund some of your budget gap.
Additionally, it will help grab your CFO’s ear when she hears a Sales leader say, “Marketing needs more program dollars or Sales can’t hit our revenue target.”
Potential sales budget support: +2%–+4% of budget.
7. Hold on to a holdback
Will more budget cuts come as 2023 goes on? It’s certainly likely. To try and minimize the impact on your team, I suggest holding back an additional 5%–10% of budget that you can:
- Allocate later in the year to double down on top-performing programs
- Cut without impacting team morale and your already-planned activities.
|Budget Area||Savings Amount|
|Buh-bye big shows||5%–10%|
|Push out infrastructure investment||2%–6%|
|Lose some licenses||1%–2%|
|Nix non-rev spend||1%–3%|
|Uncover unused POs||1%–3%|
Hopefully your firm isn’t going through a budget-trimming exercise, but if you do, you now have some tactics and data points to help. You can download our budgetary guide sheet for further insights, or we’re happy to hop on a quick call to be an objective sounding board for you as you think through your budgetary trade-offs.