The coronavirus pandemic placed businesses in a tricky life and death situation. The reason is obvious. The lockdown measures have led many businesses to close their doors as a way to curtail the spread of the virus leading to a drastic drop in patronage. 

Thus, the only thing that’s on the agenda during this period is to survive. A survey conducted by Gartner revealed that 65 percent of marketers face moderate to significant budget cuts due to the coronavirus disruption. 

It seems like thriving in a pandemic is like a pipe dream. Or is it? 

With the drastic drop in cash flow, businesses had to find where to reduce spending to stay afloat. One of the items that is usually shortlisted for the cut is the marketing budget. Sounds like a smart move, right?

This is where PostcardMania completely changed the narrative that cutting the marketing budget is a good idea. Instead, they did the complete opposite of the majority - they maintained their marketing budget. It’s not a small budget either, ringing in at about $100,000 per week. 

Just like every business, PostcardMania did experience a dip in revenue during the heart of the pandemic. Their weekly earnings were at $730,405.89 which was a half a million dollar decline from their first 11 weeks of the year when their weekly earnings were about $1.25 million. 

But PostcardMania was able to quickly recover only because they maintained their marketing budget. And as a result, by the end of April they were able to cash in an average of $1,089,427.09 as weekly revenue and it has been that way ever since.

The story behind the decision

PostcardMania’s approach to the disruption caused by COVID-19 didn’t happen by accident. They learned it the hard way. Thus, we need to go into history to appreciate the origins of the decision to keep the marketing budget.

The financial crunch businesses are experiencing thanks to the coronavirus pandemic is no different from what was experienced during the 2008/2009 recession. 

PostcardMania lost 46 percent of their client base when the housing bubble burst. And just like every business owner at the time, they were faced with the decision to cut their marketing budget to save the business and avoid layoffs. And cut they did. 

It wasn’t long until they noticed that taking marketing out of the budget was doing more harm than good. Cutting the marketing budget stripped 15 percent out of their $30 million revenue and left them barely surviving paycheck-to-paycheck. 

After studying and tracking their numbers, PostcardMania discovered that cutting the marketing budget was making them lose leads. And it was the leads that brought in the money. A switch to increasing the marketing budget helped keep the company alive during the 2008 recession. 

When the pandemic hit and they noticed the signs of a financial crunch, cutting marketing spend was out of the question. Although they did experience a dip in revenue in March, they were able to quickly rebound to achieve over a million in weekly revenue. In fact, May 2020 was the best May on the books for the company, which was founded 22 years ago in 1998. Further signs point to an all-time high summer for PostcardMania, a company that usually sees its revenue slow during the summer months.

Will this approach work for your business? 

PostcardMania was able to rebound their leads and sales during the pandemic. But PostcardMania is one several businesses that experience the same results by keeping their marketing spend intact during a recession. 

The restaurant industry is having one of the worst periods in the history of recessions. Business Insider reported that the National Restaurant Association (NRA) estimated that the restaurant industry lost $25 billion in sales before the end of March, 2020.

This is reminiscent of the effects of the great depression in mid-1991. And just like any business during a recession, there were budget cuts. While the popular fast food chain, McDonald’s, cut their advertising during that recession, Pizza Hut increased theirs. This led to a 28 percent decline in sales for Mickey D’s and a 61 percent increase in sales for Pizza Hut. 

The rationale behind keeping the marketing budget

A survey by Influencer Marketing Hub showed that only one out for four companies are determined to increase marketing activities during the pandemic. Such a move may seem outrageous at first, but there is some sense in it.

  1. Boosts brand visibility 

According to Influencer Marketing Hub’s survey 74 percent of brands are posting less on their company social accounts.

As businesses reduce their marketing expenses, they are, by extension, also reducing their visibility. That means businesses that maintain their pre-existing marketing budgets secure or increase their visibility to their ideal customers.

 

  • Stay top of mind

 

When you cut back on marketing, your visibility drops. Gradually your clients and potential clients start to "forget" you. Marketing is the tool that keeps your business top of mind. 

 

  • Portrays a strong brand

 

Aside from increasing brand visibility, investing in marketing positions your business as a brand that’s able to withstand challenging times. In unstable times, consumers would rather deal with stable businesses. 

 

  • Take advantage of lower marketing costs

 

The cost of advertising drops in a recession. This gives you the opportunity to leverage on more marketing than what you would have before the pandemic.     

So is cutting the marketing budget a bad idea?

PostcardMania proves that keeping the marketing budget intact during the COVID-19 pandemic can help you thrive through the impending recession. 

 

It might seem like it's against good judgement to do so, but PostcardMania's $1,089,427.09 weekly revenue — a huge recovery since the pandemic hit — is testament to the fact that it's the best decision you could ever make for your business. 

All through the famous recessions noted in history, marketing handsomely rewarded businesses that didn't give up on it. And just like PostcardMania, Amazon, Pizza Hut and Taco Bell also shared the same story as they cashed in when they faced recession.