Marketing Under Pressure: Why Cutting Budgets Is So Popular, and So Wrong
When revenue softens, marketing is cut first. The evidence says that is usually the wrong move. Here is what MMM shows about cutting, protecting and right-sizing budgets.
Cutting marketing is the most popular decision in a soft quarter. It is fast, it is visible, and no one in the room has to defend the number as strongly as any other line. It is also, on the balance of evidence from thirty years of MMM work, wrong more often than right.
The pattern is old and well-documented. Brands that maintain or grow share of voice in a downturn outgrow their category coming out. Brands that cut recover, but from a smaller base, and the ROI on the eventual recovery spend is lower because the brand equity is thinner. The IPA, Ehrenberg-Bass and Kantar have all published on this. The MMM work quietly confirms it, quarter after quarter.
So why does the cut keep happening?
Three reasons the cut wins in the room
Certainty of savings, uncertainty of return. The GBP 5m saved is a scalar the CFO can bank. The revenue foregone is a distribution the marketing team cannot quote to two decimal places. Certain savings beat uncertain returns in almost every boardroom conversation.
Payback lag. Brand-building spend pays back over eighteen to thirty-six months. The quarter in which it is cut looks fine. The damage shows up two years later, by which time the causal chain is invisible.
No one owns the counter-evidence. The marketing team does not have MMM outputs at hand that show the specific payback of each channel, so the counter-argument is asserted, not proved. Assertions lose to spreadsheets.
What a well-run measurement programme changes
Three things.
First, it produces the counter-evidence on demand. When the CFO proposes a 20% cut, the MMM output shows exactly which channels sit on the flat part of the response curve (where the cut is free) and which sit on the steep part (where the cut destroys incremental revenue). The 20% cut becomes a 6% cut, applied surgically.
Second, it prices the brand-effect lag. Modern MMM captures the multi-year decay of brand spend properly, so the boardroom conversation includes the eighteen-month revenue drag from cutting brand, not just the immediate saving.
Third, it earns the marketing team a seat in the room. A function that produces defensible, finance-grade numbers is not the first line cut. A function that produces glossy decks is.
The right question is not "how much to cut"
It is "which pounds of the current budget are underperforming, and which pounds are protecting the recovery". Cutting is the answer to a different, cruder question. Trimming is the answer to the right one.
A marketing budget that has been through a proper MMM refresh in the last quarter is not cut in a downturn. It is right-sized. The difference is worth two to four points of revenue over the cycle.