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November 05, 2019

Anna Ruth Williams



While Bloomberg Economics says there’s a 27% chance of a recession in 2020, more than half of all CFOs and half of all small business owners disagree and believe that a recession is imminent. Just last month almost two in three finance officers in large cities said they’re predicting a recession as soon as 2020. 

Unfortunately, the election season and the U.S.’s heightening trade war with China are all happening at the same time that corporations are developing their 2020 annual budgets. This confluence of events gives those with budget planning responsibilities, like CMOs and COOs, big pause.

For companies of all sizes, there’s often an unfortunate knee-jerk reaction by the Board or C-Suite to scale back or eliminate PR and marketing initiatives out of recession speculation. This rationale is understandable. In fact, the inclination to protect cash amidst economic uncertainty isn’t just the sign of good leadership, but it’s essentially what one might think any fiscally responsible organization would do.

But history suggests that the predisposition to tighten the belt by cutting corporate communications might be the wrong approach. In fact, recessions often represent the perfect time to invest more in PR and marketing services instead of retracting them.

For example, Subaru not only bucked the trend of automotive sales declines during the last recession but set the course for record-breaking sales in the years to come. How? A 2009 Ad Week article credits public relations. The article says record sales were attributed “to the consistent message that the company puts forth from all facets of the company.”

So, how can technology CMOs and VPs of marketing get the best possible outcome this budget planning season? Here are two key steps:

1. State Your Marketing Budget Case to the C-Suite

If your C-suite and board members don’t have a strong tech marketing background, they might genuinely be unsure of an adequate marketing-to-revenue ratio. And therefore, they might be even more apprehensive when you submit a large budget for the New Year. So, submit your budget along with context that shows rationale and prudency. For example, according to Deloitte’s The CMO Survey, companies spend 7.5% of revenue on marketing, but that number is much higher for tech companies at 13.8%. And Wordstream says that startups and growth-stage companies’ marketing budgets should be as high as 20% of gross revenue due to the burden of new market penetration.

2. Find Low-Hanging Cost Savings and Easy Places to Consolidate Spend

Speaking of prudency, it’s great to show your board that you’re exhibiting budgetary constraints given upcoming economic uncertainty. Tell them what’s critical to success, while also outlining areas that can be scaled back or consolidated. 

For example, Alloy has moved many clients from pricey wire services like PRNewswire to significantly more affordable services like PRWeb – saving them tens of thousands of dollars per year. Similarly, many of our clients have been able to cancel their hefty media monitoring subscriptions from software providers like Meltwater, since our agency provides them better reporting leveraging our internal software licenses. Bottom line - work with your agency partners to see where hard costs can be trimmed to prevent unnecessary and duplicative spending.

In addition, the annual budget season is a great time to assess agency relationships and see where work can be consolidated. Agency consolidation creates efficiencies for both partners that bleeds down throughout your organization. For example, fewer agencies is less work on your legal and accounts payable departments. But it can often get you better service. Many Alloy clients have canceled contracts with SEO firms and freelance writers - consolidating that work under their existing PR/marketing retainer with us. Ultimately, it trims costs and gives greater scale to integrated communications efforts. Win-win.

If your marketing team needs an integrated technology PR agency in 2020 that can maximize budget resources and help you demonstrate ROI, download our whitepaper Rethinking the RFP Process: How to Select a Tech PR Partner to Push the Limits.