So your company is taking a big hit during this severe recession and analysts tell us that things will get worse before they improve. Typically, marketing expenditures are the first to be cut in order make up for losses in revenue. But is this the right thing for your business?
Lessons From History
For their 2005 report, “Turning adversity into advantage: Does proactive marketing during a recession pay off?” researchers at Penn State’s Smeal College of Business interviewed 154 senior marketing executives. They cited how both P&G and Kellogg’s took advantage of the Great Depression to step-up their advertising to gain market share from their respective competitors. Chip-maker Intel not only maintained its B2B advertising during the 1990-1991 recession, but launched an expensive Intel Inside campaign to consumers. This investment was critical to maintaining their share of the growing PC market as competitors such as AMD were trying to make inroads. Walmart, moreover, successfully launched its Everyday Low Prices campaign during the recession of 2000-2001.
The Current Recession
Walmart is also succeeding during the current recession, at the expense of more expensive retailers, because more consumers shop on the basis of price during a recession. Housing starts actually showed an unexpected jump during February of this year. If you look deeper, however, the growth came from the construction of low-end multi-family rental properties. Clearly, the need for affordable housing has replaced the American dream of home ownership for many families. So we can’t overgeneralize. This brings us to some important factors to consider before deciding how much to invest in marketing during the current recession.
Type of Business.
One could easily argue that businesses that sell essential goods and services should increase their marketing efforts. Conventional wisdom would also suggest that those selling non-essential goods, or goods that consumers can defer purchasing until better times, should decrease their marketing investment. For the two latter categories, the typical CEO believes that no matter how much they spend on marketing, consumers simply will not open their wallets during a recession.
Have Your Cake And Eat it Too
I would argue that regardless of the type of business you are in, you can actually decrease your marketing spend and still out-market your more conservative counterparts. I often tell my clients: “When your competitors go dark, you don’t have to be very bright to be seen.” This suggests that a recession provides an opportunity to wipe out a competitor or two, increase your market share or–at the very least–position yourself for when the economy recovers. By going dark, your competitors not only lower the bar, but also drive down advertising costs. You must leverage your increased negotiating power during a recession to take advantage of your competitors’ weaknesses.
What Types of Marketing Make Most Sense?
First, gain valuable insights. Check out some of the free servies that will help you measure the buzz, or what people on the web are saying about your brands, products and services. These include Google Trends, Facebook Lexicon, Blogpulse, Technorati, Delicious, Digg and Twittermeter (yes, Twitter generates much of the web’s “chatter” these days). If you can afford more expensive services, such as those offered by Nielsen Online, they can provide you with much more granular results. This information can be used to learn about positive and negative sentiment about your brand, where these conversations are taking place and enable you to react to what your customers are saying. For more customized market research, there are inexpensive (and sometimes free) web-based survey tools from Survey Monkey, Zoomerang and Survey Methods, among others.
Be there when people are interested. You certainly want your products and services to appear in search results when potential customers are researching your categories on Google, if not other search engines. Your content providers can work on optimizing the keywords and anchor text on your web pages rather than writing advertising copy. Your web developers can focus on renaming page titles and placing the appropriate meta tags on your site rather than developing new sites. Its also a good time for business development types to obtain links from credible and relevant websites. This will provide the link-juice you need to rise in the ranks of organic search (SEO). So instead of lowering morale by laying off these key resources, put them to good use to solidify your web infrastructure.
Since it takes time for such SEO efforts to kick-in, you should experiment with or step-up your paid search campaigns (SEM). Why pay for impressions when you only need to pay for bona fide leads to your site? Such PPC campaigns are a very cost-effective way to increase traffic to your site and can provide instant sales if you provide a good e-commerce experience for your users.
Try some relatively inexpensive branding. Although not as efficient as SEM for lead-generation campaigns, banner ads are still good for branding purposes and are certainly much cheaper than traditional media. Choose sites that allow you to use such Rich Media as animated gifs, Flash and videos to emotionally connect with viewers.
Have others get the word out for you. Instead of depending upon massive advertising budgets to try to zonk your customers into submission, use more viral tactics to get the word out. Peers are considered more credible than brands these days, so make sure you encourage and publicize user reviews of your products and services. Monitor the buzz about your brands to find out where conversations are taking place throughout the web (e.g., on blogs, social networking sites) . Then participate in these discussions to influence the key influencers and engage your customers in more meaningful ways. Start your own blogs and encourage comments and fuller discussions. Consider placing forum software on your site so that your customers can fully engage one another, as well as you. Such “fresh” content on your site also “reminds” the search engines to steer customers in your direction.
Build and leverage your email list. To get the most out of the traffic that comes to your site, provide good reasons for them to register with their email addresses. Capture these emails to build your in-house list. This is also a good time to email your current customers. This will not only help generate sales in the short-term, but ensure long-term customer loyalty, which will be critical when the economy recovers. As you know, its much less costly to retain existing customers than it is to acquire new customers, and emails and loyalty programs can go a long way here.
Provide useful rather than promotional content. Content is still King, but the nature of powerful content has changed. Your customers have become wary of your promotional messages. Instead, provide them with useful content. This adds a tremendous amount of credibility to your brand and will have your customers returning to your site for additional information. When they do return, its OK to sell them more stuff 🙂