How can your business survive the economic impact of a COVID-19 outbreak – or the social distancing required to prevent one? First of all, do not panic ! Pulling your contracts and shutting down marketing operations until further notice it’s like a knee-jerk reaction that can set your business up for a long-term, uphill struggle to recover.
There is a lot of uncertainty around the potential economic impacts of COVID-19, and that is certainly scary, eventhough the Covid-19 will not have the same impact for all kind of business activity. Therefore if you are a landscaping business, a family-owned restaurant, a small retail shop, or some other privately-owned company, you may experience revenue losses in the coming months. If you’re a product or service business, e-commerce or brick-and-mortar, we are all bracing for a hit.
Organic or paid search would be the most effective now ?
Paid search (Google AdWords) and social (FB or Instagram Adds) are live auction which is not at all the case of organic search, that’s very much a living, breathing, competitive space and if you’re not actively moving ahead, you’re falling behind.
If it makes sense to cut back on some paid advertising for the time being (say, for example, the borders are closed and nobody is planning vacations abroad, so there’s no point right now in attracting clients to your travel agency location), then that’s a logical decision to make. However, the organic SEO and inbound marketing are a long game.
If you’ve invested in building your processes and workflow, ensuring data quality with consistent measurement, building an audience and customer base, and creating quality content that ranks, you can’t stop now.
Besides, if your competition is going to panic and underestimate the impact of an emotional decision as their engagement drops, their publishing cadence slows, perhaps their review volume or quality falls off, and they lose traction across channels, you have the opportunity to push ahead and come out on top.
Right now this is the time to stay the course and tackle all of those potentially impactful SEO and marketing tasks you’ve had on your back burner.
Marketing and SEO budget during Coronavirus pandemic
According to the U.S. Small Business Administration, many businesses allocate a percentage of actual or projected gross revenues – usually between 2-3 percent for run-rate marketing and up to 3-5 percent for start-up marketing. But the allocation actually depends on several factors: the industry you’re in, the size of your business, and its growth stage. For example, during the early brand building years retail businesses spend much more than other businesses on marketing – up to 20 percent of sales.
As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.).
This percentage also assumes you have margins in the range of 10-12 percent (after you’ve covered your other expenses, including marketing).
If your margins are lower than this, then you might consider eating more of the costs of doing business by lowering your overall margins and allocating additional spending to marketing. It’s a tough call, but your marketing budget should never be based on just what’s left over once all your other business expenses are covered.
In my experience, high-growth companies budgeting between 10 to 12%, and for maintenance 7% is a bare minimum. This means for every $100,000 in gross revenue, you should have at least $7,000 earmarked for advertising and marketing per year.
It is critical that you maintain at least this level of marketing investment throughout the Coronavirus pandemic. If you cannot afford to grow right now, at least maintain your place, otherwise someone else will take it.