• by October 13, 2000

Why is it that whenever a company is not doing well, the first thing they do is cut the marketing budget? Is that really the way to go? What about the famous motto of Gert Boyle, Columbia Sportswear's founder: "Early to bed, early to rise, work like hell and advertise!"

Anyone would agree that in the recent past dot-coms have thrown way too many ad dollars to the wind simply because, well, they had money to burn. But the moment things aren't going well, those ad dollars get locked up in a safe never to be seen again. Just a few weeks ago, AdAge reported that Internet companies targeting the consumer market have slashed their sales and marketing spending by more than 25% from the fourth quarter of last year.

But cutting marketing and advertising costs may not necessarily lead to profitability for dot-coms according to new research from Getzler & Co. In a study of 213 technology and dot-com businesses, Getzler & Co. found 57 companies had cut costs, especially in the area of sales and marketing, but that has not helped the failing companies. As Digitrends.net put it, "Optimization of marketing dollars is imperative if struggling dot-coms expect to survive; the simple cessation of spending will not work."

Brian Mittman, VP of Getzler, says cost-cutting reduces sales growth so drastically that profitability becomes nearly impossible.

That, of course is in direct contrast with Bradley Johnson, Advertising Age's interactive editor, who was recently quoted saying that most dot-coms "must make even bigger cuts if they have hopes of ever reaching profitability."

So who's right? I'm going with Gert.