• by Gary Kreissman , October 9, 2008

Americans are in the midst of a slow-motion economic panic as banks, insurance companies and jobs disappear before our eyes.  The numbers show how consumer spending continues to decline as confidence wanes.  And marketing budgets are being slashed.  What works in this ugly climate?

In past recessions, marketing spending usually moved from image advertising to "below the line" sales promotion.  The thinking assumed that it was better to take a short-term pricing hit and live to fight another day.  In recent downturns, many incorporated direct marketing in additional to promotion, because it asked for the order in a quantifiable way.  

Now we face a shrinking economy already knowing that online direct marketing - lead gen in particular - has become a marketer's most efficient tool.  But many marketers are asking how they are going to get a return on their online ad investment if the demand side is drying up. At first impression, that looks like a reasonable fear.  Consumers are already cutting their discretionary spending and avoiding new credit card purchases.  And businesses are following suit.

But let's look at why online lead gen may make more sense than ever amidst today's turmoil, and how smart marketers can best take advantage:

Customers are out there, but they are harder to reach: If there are fewer potential customers, it makes sense to pay only for the best prospects, the ones who are really interested.  Online cost-per-lead programs make that happen.  Traditional CPM-based advertising is nowhere near as effective.

Build a relationship with future customers: Yes, your selling cycle will be longer during the recession.  But getting an expression of interest now means beginning a relationship with the potential buyer.  Build trust with ongoing communications -- maybe an email newsletter.  When that reluctant customer gets ready to buy, he or she will think of you first.  Follow-up has always been key to cost-effective conversion.  It is absolutely vital now.

Don't assume your old targeting will work as well: Survival now and thriving in the next upturn may well mean finding a new customer base.  At least, you'll have to supplement your current list with fresh blood.  Attitudes are shifting quickly.  Some consumers that loved your product may be turned off now.  Others will find your story more attractive than before.  Better find out who they are and what they want.

Test how to trigger faster purchase: Marketers who understand lead-gen see the optimization potential.  Find out which offers work now and which copy direction to take.  In normal times, education might be the best motivation.  Today, price or added benefits might do better.  It is easy to set up a testing matrix and see what leads to short-term and longer-term sales.  Our clients often say that effective online lead gen is an excellent marketing laboratory.

Be real: Don't think business as usual.  Let the prospect know you're very much aware of today's economic realities. And it doesn't matter if you're selling products or services that are suddenly out of favor, like investments or luxury goods.  Change your copy and your offer to appeal to price/value or demonstrate long-term benefits.