Visable 360
The B2B magazine for digital sales
Visable 360
The B2B magazine for digital sales

Sinking B2B marketing budgets – what now? An expert explains alternatives

The findings of the latest bvik survey “B2B marketing budgets 2020” are sobering: the marketing budgets of German B2B companies have taken a nose-dive for the third consecutive year. And the impact of the corona virus pandemic is not even considered in this survey. This situation requires a change in thinking for German mid-sized companies – marketing in B2B must take a different road than in the past.

workers discussing marketing budget

Dr Carsten Baumgarth, Professor for Marketing and Brand Management at the Berlin School of Economics and Law (HWR Berlin), has supported this survey on an economic level for many years now. In this Visable interview, he reveals how he classifies the sinking marketing budgets, whether trade fairs will once again be as significant as before the crisis, and which topics marketing departments should deal with in future.

Mr Baumgarth, Henry Ford once said: “A man who stops advertising to save money is like a man who stops a clock to save time.” Was he right?

Basically, he naturally was right. Saving in communication never makes sense. However, if companies are struggling to stay afloat, they have to decide which budgets are not system-relevant. And this is most likely to impact the marketing budget more than, for instance, the personnel budget.

Marketing experts often emphasise that marketing should be turned up a notch especially in times of crisis. Is this correct in your opinion? 

A differentiation needs to be made regarding how strongly the company is struggling. It’s understandable that marketing is toned down shortly before going into administration or after massive redundancies. Other companies, however, are withstanding crises like the current one with a clean bill of health and solely have to struggle with decreasing sales.

If a financial cushion is in place, marketing and communication should definitely be intensified, since the presumed reduction in budget amongst a major share of the competition enables each euro spent to have a greater effect. In times of crisis, the marketing share is built up and often remains constant after the crisis.

Will there be a change in the trend in the upcoming year regarding B2B marketing budgets should the corona virus pandemic be over?

Just like the crisis has not led to a collapse in the economy, the recovery phase will take longer. And even then I doubt that there will simply be an increase in budgets. Companies will precisely consider what they want to spend their money on in terms of communication. A new direction of quality will therefore be taken. 

Companies will precisely consider what they want to spend their money on in terms of communication. A new direction of quality will therefore be taken.

Will relatively expensive trade fairs once again be as significant as before the pandemic? Or will many things move in the direction of digital marketing?

For many years now, B2B companies have been investing one-third to 50 per cent of their entire marketing budget in trade fairs – and I would be surprised if this became much less after the crisis. The reason for this high budget is also in the increasingly number of trade fairs and, above all, the increase in regional and highly specialised events. These will continue to have an audience. However, the big trade shows will suffer more, those which present the industrial landscape of an entire country or even the whole world.

But I’m quite certain that we will once again visit traditional trade fairs after the pandemic. After all, as experience has shown, the digital versions cannot truly replace the contact aspirations and the negotiation behaviour of people. The events will, however, receive a stronger digital touch. The happenings surrounding further education, such as congresses or keynotes, could, for instance, be transferred online.

Despite all budget restrictions, those responsible for marketing have to do their job. In this context, you talk of three topics for the future of marketing: digital marketing leadership, purpose orientation and new brand management. Can you explain their significance?

Digital marketing leadership is in reference to marketing departments in companies that are led digitally; in other words, for instance, that leverage innovative digital solutions or employ data experts. Studies show that such leadership pays off double: one the one hand, these departments are better positioned within their own company due to their digital know-how; on the other hand, they make a much higher contribution to the company’s success.

I understand the term “purpose” to mean the necessity of B2B companies to reflect on the purpose of their actions. Compared to the B2C segment, this has proceeded rather slowly to date. Those who don’t wait and actively go forward will gain a competitive advantage. We’re not talking about saving energy here or pushing forward with a charity project – but about the question of whether companies can truly have a positive impact on the world with their products and services.

And third, B2B companies should be open to a new and flexible brand management style. Not be so strict as they have been, sticking to the corporate identity down to the last detail. After all, we have completely other environments today. Take co-creation: a brand today is not developed any longer solely by the company, but by all stakeholders together. As a person responsible for marketing, this means I have to learn to be much more open and let the influence of the community play a role. On top of this, brand management must be much more data-driven in future. If data is analysed properly, we may be able to see a necessity for adapting the brand.

                                       Dr. Carsten Baumgarth, Professor for Marketing 
          and Brand Management at the Berlin School of Economics and Law (HWR Berlin)

B2B marketers have to solve increasingly complex and new tasks with ever-decreasing budgets. Is this doable?

Complexity is increasing in nearly all departments. Which is why more personnel is being hired everywhere. In marketing, however, there are ways for getting a grip on this complexity: marketers have to see themselves more as moderators of networks who find internal and external specialists and bring them together. This ongoing method of thinking in silos – the one does this and the other only that – has to be stopped.

The second way also goes in this same direction: the marketing team must be created by bringing together competencies to a higher degree. Generally speaking, most marketers come from the creative world and have more or less similar qualities. In the team, however, there should also be someone, for instance, who understands data and maybe someone who is familiar with sustainability and ethics.

And the third way that not only marketing departments are being affected: we all have to learn much more in order to be prepared for the future. And I don’t mean the one or other problem-based seminar in the year, but ongoing, broadly organised further education in the competence fields that will arise in future.

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