While companies have cut back on marketing budgets due to COVID-19, 73% of CMOs expect the pandemic’s negative impact to be short lived, with a positive outlook for business performance in the 18-24 months, according to .
In fact, CMOs report they expect to increase investments across major channels and resource areas in 2021. This optimism, however, is not shared by all members of the C-suite.
A Gartner poll reveals nearly 60% of CFOs are building scenario plans that include a second wave of the pandemic. In addition, CFOs report a strong connection between COVID-19 and challenges with the macroenvironment, revenue loss and demand. Further Gartner poll data indicates that they see a strong connection between the disease outbreak and challenges with the macroenvironment, revenue losses and demand.
This contrast should alarm CMOs and reinforce the need for a collaborative and agile approach to budgeting and planning. Ignoring business realities can threaten even the most critical spending priorities.
Plan for future disruption
Previous points of crisis such as the Great Recession of 2008 have revealed a pattern of business behaviours: initial response, recovery and renewal. As the world progress into the ‘recover’ and ‘renew’ phases of the pandemic, CFOs will turn their attention to profitability. Perhaps, given its ongoing challenge to prove ROI, marketing has the dubious honour of topping the list of functions that finance will look to for trimming expenses even further.
Initial responses to budget cuts were focused on canceling or delaying events and campaign launches, amending agency commitments and reducing contractor headcount, halting long-term projects and reducing media buying. But another round of required cuts may force CMOs to confront less temporary actions. CMOs should plan for future budgetary pressures now, rather than gamble on budgets bouncing back.
Collaborate on flexible scenario plans
Because there are no existing playbooks with canned strategic responses for a global event of this kind, CMOs must balance their optimism with pragmatism. To do this, CMOs should collaborate to build cross-functional scenario plans for a collective view on the opportunities and risks in uncertain markets. Leaders must identify the costs to eliminate, essential costs to shield and costs that deliver greater efficiency and ROI.
Volatility and uncertainty will persist in the year therefore CMOs must ensure their plans are flexible and adaptive. Leverage the tenets of agile methodology to develop plans that can respond quickly to market uncertainties.
Traditional planning moves too slowly to respond to change and manage uncertainty, meaning plans are outdated before they begin. CMOs that adopt agile methodologies will be better equipped to react to emerging opportunities and threats.