As has been in the case during every downturn I've lived through as a professional (this is my third), many observers of the marketing discipline are quick to remind us that "studies show" successful companies increase advertising spend during downturns and reap great rewards from having done so during recoveries. Of course, those most emphatic in offering this counsel are those peddling media and marketing services.
One of many possible examples can be found in a September blog post by John Quelch offering advice on "How to Market in a Recession". Quelch is a director at WPP, so there may be some bias when he counsels: "Maintain marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times."
Even though we also peddle marketing services, I question the wisdom of this line of thinking. More to the point, we need to be mindful that what was true in the past may not longer hold.
What's different now?
- Survival is not a Given. The severity of this downturn, coupled with the precarious state of many businesses in industries already experiencing profound structural shifts, changes the traditional calculus. In the past, the impetus to cut marketing was to preserve financial performance metrics and meet market or investor expectations. If marketing became a bargain because the marketing space was less crowded due to competitors withdrawing, then a failure to invest was a triumph of short-term over long-term thinking. But now, there may not be a long-term without a sharp focus on the short-term.
- Rapidly Changing Marketing Options. Even without the financial pressures created by the downtown, changes in the relative performance of different marketing channels reduce the ability to confidently invest in marketing. For companies that don't yet have the ability to comprehensively measure marketing ROI (and that would be most companies), doubling down now takes more guts than sense.
- Rapidly Changing Consumer Behaviors. This environment is driving big changes in consumer behavior. In many cases this will force companies to recalibrate their understanding of customer segments and value and associated pricing, positioning, and marketing strategies. These consumer shifts may play out over years, and sitting on the sidelines indefinitely is not an option. However, maintaining or increasing marketing before doing the work to take these actual or potential shifts into consideration is risky.
So what to do? Our own admitedly self-serving advice would be to relook at what your research and analytics efforts can tell you about how the customer is changing, marketing effectiveness, and marketing ROI. But do so pragmatically. There is no need to venture off on big, expensive projects to build "world class, end-to-end, closed-loop marketing analytics and customer intelligence global centers of excellence". Figure out what you need to know over the next six to nine months and lean hard on some outside experts to provide some quick answers at a low cost. Everyone is hungry these days.
Quelch sees this, too. To his credit, his number one piece of advice is:
But the big question is whether these changes will be temporary adjustments to deal the immediate situation, with a reversion to old behaviors once the economy recovers. Or will more permanent changes in values and behaviors take hold?
This isn't really a series, but I'll offer some thoughts on smart ways to cut when you need to cut marketing spend in a follow-up post.
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