A sure sign a company is in trouble – It stops spending money on marketing

 ·1 Jul 2024

When a company stops spending money on marketing, it is a “sure sign” that the business is in trouble.

This was a key lesson former Comair CEO Glenn Orsmond learnt while working in the highly-competitive airline industry.

In his book Crash and Burn, which details the demise of Comair, Orsmond shared his experience working with Dave Novick.

Novick was a pivotal figure at Comair and was behind many of the company’s hugely-successful ventures – including the launch of low-cost airline Kulula.

In their battle against competing airlines, Novick told Orsmond that when a company stopped spending money on marketing it was “a sure sign” that company was in trouble.

“For some reason, Dave’s advice about marketing spend being a barometer of a company’s health resonated with me,” said Orsmond.

“I never forgot this lesson and during my next airline project it served me well.”

Everyone knows Coca-Cola for a reason

Orsmond’s lesson in marketing is epitomised by the world’s best companies – including Coca-Cola.

Billions of people worldwide know the Coca-Cola brand and its products, yet Coca-Cola continues to advertise aggressively every day to ensure it maintains its marketing-leading position.

This drive to remain top-of-mind sees Coca-Cola spending over $4 billion (R72 billion) each year on marketing and advertising – strengthening its brand equity and allowing new products to quickly gain traction in the market.

Failing businesses go the opposite route – typically cutting costs as quickly as possible, which includes marketing budgets being slashed.

The result is a death spiral, where companies advertise less and therefore generate lower sales – which reduces revenue and brings about more cost-cutting. This pattern continues until the business dies.

Increasing marketing budgets

In South Africa, many businesses are not marketing as effectively as they should be – due to a lack of marketing and advertising budgets.

Broad Media’s 2024 Marketing Budget and ROI survey found that 40% of South African marketing professionals said their company marketing budgets were too small.

Interestingly, this lack of marketing budget was reported at both small businesses and large companies – indicating that new and established businesses alike were not allocating sufficient resources to their marketing teams.

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