But the operational reality is knocking on the door of every business that buys, ships, or prices anything.
And apologies a little longer CMO Field Note for today.
Since the closure of the Strait of Hormuz in late February, roughly 20% of global oil supply has been disrupted. Brent crude surpassed $100 a barrel for the first time in four years during March. The head of the International Energy Agency described it as the largest supply disruption in the history of the global oil market. Some shipping companies have suspended routes, chemical manufacturers across the UK and EU have imposed surcharges of up to 30% to offset surging energy costs, and Goldman Sachs revised its inflation forecast up and lowered its GDP growth projection within days of the conflict escalating.
For those indirectly affected in business, this is not just geopolitical noise, this is a cost structure event.
Inside the businesses that I work with, those with revenues around $5million to $50millon, here is what I see happening. Delivery costs are rising, supplier costs rising, energy costs rising, margins tightening and cash flow buckling under the pressure. My gym also sent a message to members this week telling us all that after careful consideration, they are left with no choice but to raise the membership fees we all pay - they are feeling the energy cost impacting them. And then to top everything off, almost without fail, someone looks at the marketing budget and says it isn’t working.
The marketing didn’t change, the economics changed. I see the marketing getting blamed because it’s the most visible expenditure with the least obvious short-term return. Nevermind if there is a war going on, and consumers are being more careful with their hard earned cash, or if the strategy is wrong, it’s always the marketing’s problem if it can’t justify itself.
The businesses navigating this well are doing a few things differently though.
They’re not cutting first and asking questions later, they’re getting clear first. They are asking some key questions:
Which offers are genuinely strong enough to convert at a higher price point in the current climate?
Which channels are producing measurable return despite consumer anxiety right now?
Where is the team’s time going, and what is it actually producing?
I firmly believe that external shocks don’t kill businesses, it’s an unclear strategy during external shocks that does.
I know this from my own experience. My first business collapsed in the height of the economic downturn in 2008/09. I owned and was running an advertising agency at the time, working with clients across the third sector - charities, non-profits, local government, and a division of the MoD. Every single one of those clients is still around today. My business isn’t.
Yes, the sub-prime crash had an impact on the financial decision-making inside our clients’ organisations. That wasn’t what brought us down. Internally, we had grown so fast, and had a fairly large team, but we had no real processes, no clear strategy, and no poise to ride out the storm when it hit. The external pressure was real. But it was the lack of foundations that made us crumble.
That time in business taught me the most significant lessons I have ever learned in business. The key lesson was to get the foundations in right, as soon as you can. It’s like that Sunday school lesson we learned as a kid, when you build on solid foundations things last, build on sand and the’ll wash away when the storms come.
When everything tightens - margins, budgets, team capacity - the businesses with strong foundations of vision, clarity of purpose and a solid delivery mechanism, they keep moving. The ones still trying to do everything with a loosely defined strategy freeze and suffer the worst at times.
As always, let me finish with an important question to ask right now if some of this resonates and lands with you and conversations in your business right now.
“Let’s for get what we think we need to cut for a moment and ask what do we need to make absolutely clear?”
If the next few months are going to be harder than the last three, clarity is not a nice-to-have, it’s the lever that you can pull on to stay alive and thrive.
A great CMO knows all of this and will think strategically about that line between the investment in systems and resource in your marketing division, linking it directly to revenue all the time, despite the economic or geopolitical events around the world.
