A Guide to Navigating 2023 Marketing Budget Cuts

There is no need to panic. Our 2023 budget guide contains tips and strategies from marketing directors and CMOs that will help you navigate the coming year.

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30% of advertisers are cutting their 2023 budgets

A World Federation of Advertisers (WFA) survey of 43 multinational companies indicated that nearly 30 percent of major advertisers say they’re cutting their ad budgets into next year due to economic downturn.

Economic outlook 2023

What can you expect in 2023 from the economy and the advertising industry?

Unfortunately, businesses may experience a downturn in the economy in 2023. With the current economic recovery being fragile, any shocks to the system could put pressure on businesses. Economic challenges will be exacerbated by rising inflation, political uncertainty, and increasing unemployment rates. Businesses should prepare for more difficult times ahead and seek advice on ways to remain profitable even during a downturn in the economy. Cost-cutting measures and careful planning may help insulate businesses from potential losses due to an economic downturn. 74% said the economic downturn is influencing their 2023 budget decisions (WFA).

traditional advertising budgets

Shifts in Placements Will Continue

To maintain customer loyalty despite a potential economic downturn, many industries are shifting their resources away from traditional advertising and integrating direct-to-consumer marketing tactics or new types of digital advertising. This will enable them to bypass the need for ad exchanges while still engaging customers. 42% of survey respondents said they would be spending more on digital advertising next year—50% are planning to cut “offline” ad spending.

google & meta advertising market share

The Duopoly's Domination will Dwindle

Google and Meta are no longer occupying the spotlight as they did in 2021, when their digital ad spending share exceeded 50% for a brief moment. 2022 marked a turning point because of Meta's disastrous year coupled with Google's growth decline - ultimately leading them to never again reach such heights. It is now clear that other players like Amazon, Microsoft, and Apple have rapidly become forces within the global advertising realm.

CONSUMER HABITS

Gen Zers Continue to Shake Up Consumer Habits

As consumer habits shift, it is Gen Z who is driving much of the change. Millennials were dubbed digital natives; yet Gen Zers are now leading a revolution that craves alternatives to the giants they grew up with and yearns for experiments in social media. With their short attention span, proclivity towards group buying, and lack of brand loyalty, several industries will be forced to adapt - particularly as this generation's spending power increases over time.

Marketers 2023 plans

How are most marketers spending their budgets in 2023?

In 2023, most marketing directors are taking a careful and strategic approach to their budgets. With consumer spending predicted to increase over the next few years, much focus is being placed on optimizing current campaigns for maximum impact. Investments in technology, digital advertising, and data analytics are becoming more commonplace as marketers seek to measure campaign performance in real-time and adjust quickly to changes in consumer preferences. Marketers understand that focusing solely on traditional ad spending is no longer enough; attention must be given to creating content that will engage customers across all avenues.

Increasing Organic SEO and Content Creation

Content marketing has become essential for creating an effective brand presence in the digital space. As such, many marketing directors are allocating a large portion of their budgets towards organic content creation and curation initiatives such as influencer outreach and social media campaigns. All these efforts come together to create an integrated strategy that leads to substantial returns in customer engagement and loyalty.

Graph showing a 68% increase in seo budgets in 2023Graph showing an 83% increase in content budgets in 2023
How Marketers Are Spending Their Money in 2023 - We Asked 8032 Marketers (https://neilpatel.com/blog/2023-marketing-spend)
83% of companies are increasing their content production budgets

According to a survey from NP Digital, 68% of companies are increasing their SEO budget and 83% of companies are increasing their content production budget.

WAYS TO REDUCE YOUR MARKETING BUDGET

How to Do More with Less?

It can be easy to feel overwhelmed when trying to maximize a limited marketing budget. Fortunately, there are strategies and tools available that can help marketers do more with less, allowing them to get the most out of their limited budgets. In this section, we will explore how marketers can create effective campaigns and reach their desired audience without breaking the bank.

Work with an Agency in a Smaller Market

Don’t Go Dark

Choose Tactics Wisely

Outsource Where it Makes Sense

Lock in Media Rates with Longer Commitments

Work Smarter, Not Harder

MESH team conducting an agency planning session

Work with an Agency in a Smaller Market

Smaller advertising agencies are well-suited to many businesses and can offer an array of benefits. For one thing, their size allows them to focus on individual client needs in a way that larger firms cannot match. They can also create closer relationships with clients while providing top talent at cost-efficient rates – perfect for those looking for expertise delivered without the hefty fees associated with bigger companies! Plus, multi-talented staff members may be able to provide solutions not found elsewhere; giving you all the resources needed from start to finish under one roof.

Don’t go dark

When a budget is reduced, it can be tempting to cut advertising media dollars first; however, cutting off these investments completely can be detrimental in the long run. Advertising media dollars are essential for building brand awareness and connecting with consumers, both of which are integral elements of success. Reducing the amount spent on advertising media should always be done strategically and with a close eye on ROI (return on investment).

Without proper tracking, you may inadvertently miss out on valuable return or miss opportunities to fine-tune your campaigns while still maintaining an effective budget. Don’t overlook the importance of ad media when making decisions about budget reductions – carefully evaluate your current efforts and consider potential gains before cutting anything out altogether.

Photo of a group of people discussing which marketing tactics to utilize

Choose Tactics Wisely

With a limited budget, marketers must be mindful of which media tactics they choose to deploy. It can be tempting to spread a budget too thin and invest in multiple channels without adequately assessing the ROI of each. Instead, focus your resources on outlets that will give you the biggest bang for your buck. Researching trends in your industry can help you identify areas of growth and establish benchmarks for success. Additionally, leveraging data-driven insights is key to making informed decisions about where to invest and when to trim back spending. Working with media buyers can give you the chance to access additional tactics while staying within your budget. They have relationships with publishers and can negotiate added value to help gain additional tactics to help make media packages more effective.

Work Smarter, Not Harder

Automation tools and generative AI are becoming increasingly popular solutions for streamlining mundane marketing tasks. By leveraging these advances, companies can save time and reduce the costs associated with manual labor while still achieving their desired outcomes. For example, automated email campaigns can target users and distribute content quickly, while AI-powered analytics can help to identify trends in customer data. Automation technologies can also be utilized to monitor social media conversations, manage website changes and more. Additionally, robust automation tools can be integrated with other systems such as CRMs to increase the efficiency of marketing processes. All in all, automation tools and AI offer businesses a powerful solution for reducing the burden of mundane marketing tasks.

Outsource Where it Makes Sense

Outsourcing marketing tasks can be a great option for businesses with limited budgets and resources. On one hand, you have access to increased expertise, a deeper talent pool, and the ability to scale quickly when needed. On the other hand, there may be less control over project timelines, and communications, and there could be additional costs associated with outsourcing. Hiring in-house subject matter experts can ensure that each person is knowledgeable about your brand and there's an established shared vision. However, this requires an up-front investment of money and time that may not always be feasible.

A photo of a developer working on code

Lock in Media Rates with Longer Commitments

Committing to longer media spends can be advantageous for businesses looking for the best possible rate. Companies have more leverage to negotiate when they make long-term commitments, as opposed to buying on a month-to-month or sporadic basis. In addition, committing to longer periods allows for more time for metrics and analytics to measure the success of a campaign and identify areas of improvement. With a longer media spend, companies can obtain better rates and gain stability in their budgeting. However, it's important to ensure that you are able to make use of the services over an extended period so the costs do not become prohibitive.

conclusion

Creative Thinking Will Help Companies Stay on Top in 2023.

All in all, marketers have to be nimble and understand that the future may present challenges that have not been encountered before. It's critical to have a pulse on the latest shifts in consumer behavior and technology adoption which can help you identify potential opportunities and stay one step ahead of your competition. And when budgeting for the next big downturn don’t discount trying something new – it could be just the leap you need to keep your marketing efforts churning despite financial pressures. When it comes to breaking things down, making adjustments and finding alternatives, MESH can help your company develop strategies that keep your campaigns year-round despite shrinking coffers. Email us at chatwithus@meshbr.com and let us help make sure 2023 is still a prosperous year no matter what life brings!

FAQS about Marketing Budgets

Which channels should my budget focus on?

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With limited resources, it is essential to evaluate which marketing channels are worth investing in and which ones provide the most return on investment (ROI). Consider cutting or reducing resources for channels that don’t bring in a good ROI and focus more on the ones that do. Traditional advertising may still provide good value if it reaches your target audience effectively and can be measured. If you're capable of crafting top-notch video content, then now's the time to jump into OTT as more and more individuals are cutting cords from traditional media outlets in 2023.

What kind of ROI can I expect from my budget?

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Depending on the type of marketing campaign and the strategies implemented, businesses can see a healthy return on investment (ROI) from their marketing budget. Generally, the gold standard for marketing ROI is a 5:1 ratio. Reaching a 10:1 ratio of returns over expenditure would classify as extraordinary ROI and anything below 2:1 may be deemed unprofitable because it typically costs more money to create and promote products/services than what you will acquire in return.

How do I track the success of my campaigns?

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To make the most of your marketing campaigns and maximize efficiency, tracking their success is a must. Incorporating data analytics tools such as Google Analytics, HotJar and others into your strategy can be extremely beneficial in this pursuit - uncovering valuable metrics such as impressions, engagement rates, conversion rates, and website traffic helps you measure how impactful each campaign truly was. Utilize tactics like QR codes and vanity URLs to gauge the effectiveness of traditional advertising in propelling your success.

How much should the marketing budget increase each year?

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There is no universal standard for how much to increase marketing budgets every year, but a business should adjust its budget according to their growth and the ever-evolving market conditions such as inflation.

What percentage of a budget should be for marketing?

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According to Deloitte's Annual CMO Survey, marketing will comprise roughly 13.6% of a company’s total budget in 2023. Businesses have been investing more in marketing over the past 12 years, with a typical expenditure rate of 8.7% of total company income by 2022. For B2B product industries, 7.8%, while similar percentages are allocated for B2C Services (6.5%) and B2B services (5%). The highest percentage is reserved for B2C Product industries at 15%!

How should I split my marketing budget?

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When deciding how to split your marketing budget, you should consider the various goals of your marketing campaigns. It is recommended to start by splitting budgets evenly between brand awareness and engagement tactics and performance media. With limited resources, it is essential to evaluate which marketing channels are worth investing in and which ones provide the most ROI (return on investment). Don't forget to include expenses such as sponsored content, new marketing staff, software and cloud subscriptions and marketing automation software.