A survey of 600+ MarketingProfs members conducted this past week reveals that the majority of marketers have already started adjusting plans and budgets for 2009 as a result of the financial crisis.
The MarketingProfs survey raises two important issues…
But first, some details from our survey:
* The majority (52%) of marketers are already making changes to plans and budgets as a result of the economic crisis with 65% of marketers expecting negative effects on marketing overall.
* Whether the market continues to fluctuate or falls into a recession, 75% of marketers surveyed expect the impact of the crisis will extend through 2009 and into 2010. Expectations include departmental staff layoffs (25%) or a decrease in compensation (43%) with 17% expecting both to occur.
* Online marketing is turning into a venue where marketers can stretch their dollar while accurately targeting leads and customers. 60% of all marketers surveyed stressed that they would be increasing their online budgets while 85% would be reducing their use of traditional marketing vehicles.
While the survey suggests that marketing budgets will most likely shrink along with staff size, history shows this is a mistake. In the long run, those who are most successful keep their products and services in the minds of customers and prospects.
Here are the two important issues the survey raises, in my mind:
1. Marketers know that marketing spend is still widely viewed as a discretionary expense that can be easily cut in anticiaption of an economic downturn. For some reason, we marketers have not made any progress convincing our senior management that cutting marketing in a recession is a big mistake. Why not?
2. The economic downturn will speed the shift to digital marketing and away from traditional media. Over 62% of marketers said they are going to increase spending on digital marketing and 84% said they are going to reduce spending on traditional vehicles. Apparently, marketers believe that digital marketing is the way to stretch their budgets. Is this true?
Please leave your thoughts below.
Rob,
I can’t really speak too much to your first question, but I think there is a lot of truth to the second one.
It isn’t just the economic downturn that is making digital marketing, and more specifically net marketing, much more attractive. For a while there has been a trend towards marketing as a science rather than an art. (I do think that marketing as an art plays heavily into why it is viewed as discretionary)
Many of the traditional marketing channels are having a hard time adapting to this model, as they are based more on gut feelings and generic research to prove viability.
With net marketing you can target demographics effectively, personalize your message in meaningful ways, and only often pay for actual impressions.
This often leads to less outlay of cash and better return. In my work, I focus more on email marketing, the ROI there is often over $50 for every $1 spent, and I’ve seen clients with ROIs exceeding %12000 on a good campaign.
With measurable results like that how can you not turn to that type of marketing when belts get tightened?
Roy,
Thanks for sharing the survey results. Interesting.
Most of us don’t want to hear this, but I believe and witnessed firsthand that corporate marketers haven’t figured out that ROI is important to the executive team, whether or not we agree or like it. Every time a marketer says, “We can’t measure that,” the Executive Team becomes further convinced that we represent discretionary spending.
As for digital marketing, I urge caution, especially if the online efforts are not integrated with tradional marketing. We need lots of tools to achieve strategies designed to reach measurable goals. It is a mistake to think any one tool can achieve maximum profitability.
Main media advertising, PR, events sponsorship and market research are all likely to decrease in spend during this economic downturn. So, money will naturally shift from traditional advertising to digital/interactive marketing. The next question to ask is does online advertising have “more bang for the buck”? For companies that have done their homework and have learned that people were now making final purchase decisions online, then certainly you can argue that you get “more bang for the buck”. Digital Marketing could well be one of the main industries that will benefit from this downturn, and when things turnaround (they always do), we can all be hopeful that Digital Marketing will lead the brand and advertising strategy.
I believe as a professional group, marketing needs to do a better job making the business case for the investment in marketing. Just like any investment, you want to know how that will pay off. Analysis of campaigns and making improvements based on that analysis, as well as demonstrating the impact of marketing on the bottom line goes a long way toward moving the perception of marketing as an expense to an investment that pays off — in good times and during recessionary periods.
Regarding your question in issue #1 about convincing senior management not to cut marketing budgets during a recession, there is evidence to support that theory.
Take a look at a white paper recently published by independent media agency TargetCast tcm. (Disclosure: TargetCast is a client of mine.)
The white paper is at http://www.targetcast.com/press_2008_08_25.html
For many marketers, this is a time to take a close look at the marketing mix and see what works and what’s not as effective, possibly trimming some items that might be viewed as frills or luxuries.
Roy, it would be interesting to see the breakdown, by industry of the 600 respondents. I’m more in Lewis’ camp, if digital marketing is a fit for your business and it’s where your customers are at, then by all means re-allocate. Otherwise, let’s not just jump into digital marketing because it’s more metric-driven…
Thanks all for sharing your views. Clearly there is agreement that we marketers must clearly and constantly establish and communicate the value we create. As Laura Patterson taught in her MarketingProfs seminar today (http://www.marketingprofs.com/marketing/online-seminars/172), we must have plans and budgets that focus on outputs that result from marketing programs. Once we establish that view of marketing, we can clearly communicate what will NOT happen if our budgets are cut.
As for the trend toward digital marketing, we at MarketingProfs have been planning next week’s Digital Marketing Mixer for over a year. There is still time to register: http://www.marketingprofs.com/events/5/conference. Now as we face an economic downturn, this trend will continue at a dramatically faster rate and MarketingProfs helps keep marketers current.
Roy, isn’t it sad that after all these years, execs still see marketing as a luxury. What we need is to get your Marketing Matters book into the hands of every CEO!
Again, we at StreamSend are increasing our Marketing Budget.
Just this Thursday I flew down to headquarters (I work from home) and interviewed a woman for a marketing management position (her third interview). We are going to offer her the job! She seemed very enthusiastic and showed up three times for intense interviews so I sure she will accept the offer. That and hiring a new customer support person is our small recent contributions to increasing employment in the economy.
Now, we are a small company so probably not typical but we want to do MORE marketing in the recession NOT less.
Maybe I am missing something but why, unless you are flat-out going broke as a company, would you reduce your marketing budget during hard times? The customers you bring in pay the bills, enable you to meet payroll, and earn a profit. Without strong marketing all that becomes much, much harder.
Someone enlighten me on the logic of cutting marketing? I understand if a company is going broke but beyond that, why?
Something just occurred to me: Marketing needs a Warren Buffet. An wise elder who says things like when others cut marketing, you increase it.
Maybe not everyone listens but I listened to Warren when he says NOW is the time to buy equities. I just put money in the market and it will stay there long-term just like he tells me. He is older and has proven himself wiser than me.
He is has explicated his views on value investing for decades and the results prove he knows what he is talking about.
Even if the market goes down in the short run, he is probably right.
Definitely something to discuss right now.
1) Marketing does have a function in businesses and if you cut back any area significantly you WILL feel it. That is a no-brainer. Whether the savings in costs in the short run balance the loss in revenue is up to an individual business owner. In terms of recency, you will continue to feel a cut in marketing for weeks, if not months, after the cut.
2) Numbers, numbers, numbers. Track as many metrics as you can and analyze what activities lead to the ULTIMATE conversion: sales. Show that what you are doing is working. If it is not working, FIX IT! Try something new. Keep going until you find what works.
3) Even though a lot of people say that “branding is dead” it isn’t really dead, it is just being re-invented. I really love graphic that was included in this post. It is a great representation of the Social Media, branding and marketing.
http://www.mpdailyfix.com/2008/10/we_used_to_say_that.html
You’ve gotten some good discussion going here, Roy, and I like your first question.
A big problem marketers have had is demonstrating what will happen if the marketing budget is cut in concrete financial terms. What will be the impact to sales, profits, and brand equity if we cut the budget?
Going by the results of your survey, however, I’m concerned that even if marketers had the answer to that question, it probably (and sadly) wouldn’t matter. No matter how overwhelming the evidence a marketer might have to demonstrate the contribution of a program to the bottomline, there will be cuts. At most companies, even the best business case isn’t going to move the CEO or CFO–you might as well be talking to a wall.
So the question becomes how do you spend more efficient and effectively to get the most out of what you have left in the marketing budget to maximize sales and minimize any damage to brand equity?
It would seem that’s where marketers need to be focused at this point–how to make the most during a recession given a limited budget.
I have a question more than a comment: can we prove that marketing pays for itself adds to the bottom line?
I know there is ROI and so on but some marketing activities are a bit intangible (not easily measurable) as we have discussed in this blog before.
Dear Roy,
i have read your article carefully and i have to admit that most of it has a touch of truth. Although there are many different views.
MArketing it is a pure science, it is not an art. Whoever can understand people can understand marketing. YOu need to know very well people’s psychology to be able to understand marketing.
I am working for the past 6 years as a Marketing Consultant (Freelancer) for companies operating in the Tourism industry as i am from Rhodes island, Greece.
Tripadvisor has bads and goods.
I can guarantee you that 99,9% of the people that are satisfied with a hotel they never write a comment online. 100% of the dissatisfied people write a comment. If a hotel hosts 1,000 guests a year and only 3 write a bad comment per year that’s 0,3% Customer satisfaction loss. Do you consider that bad?
Additionally electronic marketing it is takedn seriously in the most developed let’s say countries such as USA, England, Germany.
What about the rest?
Thank you