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Marketing in a Recession…. Same Goals… Smaller Budgets posted on Tuesday, 02 June 2009

It’s not rocket science to know that the US is facing a period of economic uncertainty.

Unemployment rates were at the highest that they have been in California, surpassing 9% in the month of December. The last week in February, the Dow Jones Industrial average is at its lowest in more than 11 years. The U.S. budget deficit will rise to more than $1 trillion in 2009, or roughly 7% of GDP. Housing sales have dropped 25% and the overall value of our homes has decreased almost 27%. Consumer spending is shifting, and retailers like Linen and Things and Circuit City are going out of business on a daily basis. Overall the economy currently forecasted to take a 5% drop this quarter. The biggest drop since 1982!

Perceptibly all of these variables have and a cyclical impact on all businesses nation-wide and now the marketers of these organizations are being tasked with exceeding our marketing and sales goals utilizing smaller budgets than before.

The response of marketers to the recession is dependent on individual perceptions of the market and overall forecasting of its effects on business. As a result, the recession will affect all marketers and organizations differently, including those companies that are making acquisitions and those that are being acquired. There is, however, one thing will be the same for all of us. Marketing will be much more difficult this year than it was last year. According to the Association of National Advertisers (ANA), 93% of responding marketers said they were making budget cuts and 37% of those said that they expect to reduce budgets by more than 20%. After working with several clients in this situation, here are a few tips to keep marketing efforts strong in a recession:

1. If possible, DON’T cut your advertising and marketing budgets. Studies show that increasing ad spending during a recession is not only effective but it contributes to financial performance for up to 3 years in the future. Cutting advertising during a recession potentially has the inverse long term effect for negatively affecting revenue up to 3 years for after the recession has ended. (Some reports even indicated percentages upwards of 50% in revenue loss 1 year after recessions end.)

2. Get back to the basics, and focus your marketing on those basics. What are your overall business objectives? What are your overall marketing goals? Who is your most profitable target segment and what is your competitive differentiation? Base your marketing decisions on these basic questions and keep it simple.

3. Reevaluate your media mix. Seek ways to improve efficiencies and don’t be afraid to shift marketing dollars between mediums. Be sure to look at more cost effective ways to reach your customers. Email marketing and paid search are amongst the top performing direct response tactics. Within media buys also look at dayparting and geotargeting to optimize your campaigns and reduce unqualified customers.

4. Don’t just track! Analyze… and analyze everything. It’s not enough to just have analytics running on your campaigns and websites. Use the data to guide your buys and optimize your campaigns. Try multivariate testing and consider the development of landing pages for optimization. Whether you are running paid search, display buys or driving traffic from broadband, landing pages haven been known to double your conversions in some instances.

5. Ask your agency to put skin in the game. As mentioned before all companies are affected by the recession in different ways. Agencies similar to your organization do not want to lose business and are certainly looking at our existing customers to proof them from the so-called recession. Don’t be afraid to explore at performance based pricing and bonus structures with your agencies and partners.

6. Go after your existing customers… It’s a lot easier to retain an existing customer than to get a new customer. Customers are not “not” spending they are simply just changing the way that they spend and are being smarter about how they are buy. Statically consumers are more likely to go with a trusted source. Try shifting some of your marketing dollars to CRM tactics such as email marketing.

7. Reward Loyalty and Upsell… Do you want Fries with That? McDonalds will tell you that it doesn’t need a recession for this tactic to work. Once you have targeted your existing customers make sure to upsell and cross sell with your suite of products and services perhaps even with coupons and promotions like free shipping.

8. Maintain your share of voice (SOV) relative to your other competitors. Keep an eye on historical and competitive media activity levels to determine which moves your competitors may or may not make during the economic down turn.

9. Align your sales and marketing efforts. Prospects are starting their buying cycle long before they ever speak to a sale representative. Companies (Especially B2B companies must integrate their efforts to create a single revenue pipeline.

10. Embrace Social Media. No one should still be saying “Myspace, Facebook and YouTube aren’t a good fit for my brand.” If done correctly, budgets go a long way on these platforms. Social media may still be like the Wild West, but there are plenty of opportunities to take market share on these platforms.

There are really no rules of thumb when it comes to marketing in a recession, but having the opportunity to work across several clients within different verticals, I have been able to point out the basics. I strongly believe that the companies that view marketing as an investment, not an expense; the recession as an opportunity, not a threat; and continue pay attention to customer knowledge and insights will be the ones that coming out of this recession on top.

As director of business development, Robyn Freye forges client partnerships to enhance their digital marketing initiatives. She works with clients to identify their marketing opportunities and develop efficient, performance-motivated engagements to exceed their business objectives. Bringing more than 8 years of business development, marketing and client services experience, Robyn ensures each client partnership achieves desired ROI goals. She has extensive knowledge working with clients in the financial, hospitality, travel, CPG, entertainment and real estate verticals. Prior to joining Geary Interactive in 2005, Robyn worked for San Diego Magazine and the San Diego Business Journal.

Posted by Robyn Freye