How to drastically reduce your marketing budget

The results were there. Despite smashing every KPI and producing great marketing and creative work, budgets were being squeezed.

The CEO had bet big by producing too many units of a game console that dropped 45 days late in the Christmas sales season. In an industry where 60% of revenue is made between Halloween and Christmas, this was an irreparable setback. Now mhe boss was telling me he needed me to cut $1-2 million from my budget or lay off 15-20% of my department. Happy Monday.

My job was to oversee teams and agencies producing all brand experiences and marketing for a global toy and apps company shipping over 200 new products per year. They were great people who believed in our mission and were expert creators of advertising, packaging, retail brands and thoughtful user experiences in a global e-commerce ecosystem. It was not an option to lose even one of them. We had to figure out where to find the money.

If you’re being asked to cut your marketing budget drastically, here are some strategies I’ve used to quickly cut over a million dollars:

1. Change your product marketing strategy to a primary brand strategy.

Developing awareness of several different products is more expensive than launching several products under the same brand. Take the example of Disney versus Universal. Fans will try any movie made by Disney because of the main brand presence. Universal, however, must publicize each film separately. It’s more flexible (Disney only makes family-friendly products), but it costs more to market each product.

Use multiple campaigns, landing pages, and packaging executed from a style guide to reduce production costs for rolling out campaigns worldwide. Already an advocate for brand-led campaigns, I was pushing for it. Since all of our products were on a mission to make learning fun, we could easily use this strategy. Not only did we reduce our creative agency fees, but we also doubled the rankings for brand awareness, affinity and brand trust among moms in one year by communicating how each product fulfilled our mission.

2. Create a RACI matrix and stick to it.

At least 20% of our budget was spent on redesigning, rewriting, and refactoring work from last-minute change orders. It impacted the whole company. Products were air-shipped from China to meet shelf life, but freelance and agency costs accounted for the bulk of our surplus.

My CMO agreed to realign the entire company to a documented development process using a Responsibility Assignment Matrix (RACI). The key to this work is the agreement (even a reluctant one) of all your team members, so meet with each team member at review meetings.

We discovered that most last-minute changes were the result of two executives with overlapping responsibilities. Their teams would outdo themselves as the final approver of the order instead of just hashing it. Holding RACI matrix meetings forces teams to clarify who approved what at what stage for what level of product. The level talks about the commercial impact of the product; for example, the CEO or CMO must approve Tier One products, but a marketer can give the green light to a Tier Three project.

When our RACI matrix was completed, we deployed it – with great skepticism. Our program management team was empowered to apply it, which they loved. It only took one escalation at the CMO to get the process going. (It was an uncomfortable meeting). Over the next 10 months, freelancer costs dropped by 25%, airfreight came to a complete halt, and our time to market improved by 12%. As a bonus, employee engagement increased by 15% as people felt more empowered and no longer had to skip dinner with family to meet stressful deadlines due to last-minute change orders.

3. Or switch to Agile if you can.

If you are a small business, especially one that does not ship a physical product with a firm expiration date, upgrade to a agile process also eliminates cost overruns from the approval cycle. This is because the user becomes the approver and there is less stress in shipping the perfect end product as it is continuously deployed until it is optimized. However, it is difficult for large matrix companies and those who manufacture hard lines to make this change.

4. Negotiate discounts with vendors who bear the overhead.

We spent a lot of money on photo shoots and video production using many different vendors. After running a small agency—a similar project-based business with a feast-or-famine P&L—I remembered how thrilled I’d be to get a retainer. Sure, it paid less per hour, but I slept better at night knowing the costs were covered and I could focus on cool projects that would inspire my team.

Our cost-effective solution was to find a great photographer who had his own studio (high overhead with a project-based P&L) and guarantee him a minimum of work per year – at a reduced price. We repeated this with two small video production companies.

By guaranteeing a minimum income, sellers will no longer have an incentive to get as much as possible from you per project, without knowing if you will ever come back. Instead, they are encouraged to have a long-term relationship. In addition, the quality of the work will improve with each shooting since the studio adapts its equipment, processes and subcontractors to the needs of your artistic director.

Our photography costs have dropped by 50% in two years and video production costs have been reduced by 40%. In addition, our company received its first-ever video and commercial creation awards for improving the quality of work.

There are plenty of other ways to cut a marketing budget, but try one of these proven tips for now. They work.