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Marketing Functions Are Not Immune to the Corporate Cost Cutting Axe

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One long established philosophy in business has been, “You can almost never save your way to profitability.” For decades, the edict assured that marketing and advertising efforts were the last disciplines to receive the axe when the time came to make the inevitable cuts to expenses in order to maximize a company’s profitability. But recently some very big sellers are taking a hard look at the size of their marketing budgets and questioning the value of its efforts. Often seen as an investment necessary to produce a future return from increased sales, some well-known vendors are moving marketing spend to the cost side of operations.

Uber, still seeking its first dollar of profit, recently cut one-third of its marketing department in an effort to focus its marketing efforts on those aspects that work. Building brand awareness has always been a process that was thought to require a longer term to achieve a desired return on investment, and it routinely spared the marketing department the cost cutters’ wrath, at least for a while. The shift from marketing being seen as a value proposition to becoming a cost center can be traced to advances in technology that redefined and revolutionized the art and science of marketing and advertising. “A lot of companies are struggling with how to organize and how to determine the right internal marketing structure to drive growth in a market that’s incredibly hard to navigate,” says Allen Adamson, brand consultant and co-founder of Metaforce. “The old days of Don Draper sitting down and saying, ‘Here’s our commercial’ are gone.”

The transition to leaner times is not limited to cuts at the bottom of the marketing hierarchy. McDonald’s and Johnson & Johnson have recently eliminated CMO positions and are shifting those responsibilities to other existing positions in order to tighten spending and to improve accountability and agility. “In a world where agility is king, it’s hard to get an army of 1,200 people to be agile,” concluded Adamson. “Size and effectiveness have rarely gone hand-in-hand. Just because you’ve got a big marketing department, that doesn’t mean your marketing is good.”

The reality is that the changing role of marketing is the result of the many new avenues companies have to connect with consumers. Refinements in software and continued advancements in artificial intelligence (AI) are eliminating many positions and people from traditional marketing departments. But making broad cuts to marketing and advertising budgets hasn’t always been a great idea. The landscape is littered with the remnants of once grand organizations that cut marketing spend too deeply or unwisely in an effort to stem costs and advance the bottom line. “In this day and age of obsession over quarterly results, marketing often becomes the easiest target for change,” says Erik Herskind, CEO, GoDo Discovery Co. “While marketing has made tremendous strides to demonstrate measurable value to a company, there remains the belief that companies can turn marketing on and off when faced with financial challenges.”

One avenue cost conscience organizations are taking to control their marketing cost center without jeopardizing marketing performance is to partner with independent contractors who can supplement the new leaner in-house department. The process of working with an independent service provider not only reduces the structured cost of maintaining a large group of marketing professionals, it has the added benefit of introducing a fresh perspective to a company’s approach to connecting a campaign with the intended market segment.

“Over the last decade, we’ve seen agencies break apart into specialty agencies to support a specific niche.  We are starting the reverse. Much like these companies, it’s critical to have a well-balanced team across all channels in order to drive measurable results.  For companies building an internal team, finding great talent for those roles is difficult and expensive,” comments Julie Gareleck, CEO, Junction Creative Solutions. “We are experiencing more demand for our outsourced strategic leadership.  Our team is able to seamlessly integrate with internal teams to drive performance and results.”

The smart strategy may be to eliminate waste and redundancy from marketing department structures and their often treasured methods. The “more mud against the wall the better” thinking is taking a back seat to quality messaging and more refined and targeted placement of marketing efforts. In the competitive, profit oriented corporate environment security of any business function, even marketing, remains dependent on that function’s ability to seek alternatives that enhance an organizations financial objective while achieving added value to perceived performance.

Whether you are looking to build an internal team of marketing experts or looking for outsourced marketing leadership, it’s critical to partner with a firm that provides blended experience and speak to omni-channel strategies to support growth.

Contact Junction for more information at info@junction-creative.com.

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