The Wall Street Journal reports that “marketing budgets have risen to 9.5% of the total company revenue in 2022,” and this is a dramatic increase from 2021. The question is why the dip and now the increase. What are the fundamental factors driving the market? With rising inflation, the Fed attempting to avoid recession by raising interest rates on loans, a war raging in Ukraine, and the lingering and sputtering pandemic, this is a time of organizational regrouping and intellectual rethinking.
One way of explaining the increase in spending is to attribute it to the opening of business after a long time of being forced to remain inactive. We spent two years without concerts, without public gatherings, and that took an incredible toll on many economic sectors. It is only natural that there is a strong desire to return to an active business climate. Marketing, as the public facing side of a business, is naturally how many brands will reveal their new direction.
What is more curious is that marketing dropped so much in 2021. It is common for businesses to reduce their marketing budget during a decrease in economic activity, due to how it is perceived as non-essential. Operations almost always take priority over advertising in a tough economy, but is that a best practice or is it merely a default reflex?
In retrospect, the period of the shutdown was a marketing opportunity that was missed by many. People paid more attention to online communications than ever before in history. Additionally, marketing was one of the essential services that was allowed to continue even when so many other sectors were not.
If marketing is an essential service, and the mind share that leads to market share is often won through marketing, then it only makes sense to maximize your marketing opportunities whenever you can. There is no going back in business, only forward, but as we enter this new phase of our economic recovery marketing is going to become increasingly important.