Commentary

New Year, New Outlook: Time To Rethink The Marketing Playbook

With the economic downturn in full swing, today's CMOs are under pressure to drive greater results with decreasing budgets. At the same time, media owners are under pressure to address advertisers' changing needs and a sudden decline in demand. As a result, both sides of the advertising ecosystem need to think about new ways of doing business.

 

For many marketers, the impulse is to cut advertising spend during a recession, but history shows this is not always the best approach for good companies. A McGraw-Hill Research analysis three years after the 1981-82 recession found that companies maintaining or increasing ad spending during that period enjoyed 256% higher sales than companies that had decreased their budgets.

Recessions are a unique opportunity to differentiate your company from the competition and grab critical market share. Companies with strong business models that are aggressive in a recession can even knock a competitor out of business in the right circumstances.

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Recessions create an atypical business environment that carries disproportionate risks and rewards. However, by employing some smart marketing strategies and navigating this time period well, companies can emerge much stronger in the end. These strategies include:

  • Reevaluating your entire marketing plan in the context of a down market. Will your product deliver strong value in a market where consumers are watching what they spend and eliminating many discretionary purchases? Determine what needs to change now; don't wait to find out the impact of a drastically changed landscape.
  • Focusing aggressively on accountable media. This doesn't just mean online but also looking at the new ways to measure and track results in traditional media like TV and radio. Make sure you have visibility to positive ROI on your marketing spend and reward media owners that deliver results with more dollars.
  • Remembering that advertising is a key tool to growing or maintaining market share. Don't make the mistake of just seeing advertising as a cost, evaluate the cost structure of your entire business.
  • Understanding the competitive landscape. The amount of total disposable income is now shrinking which means that to even maintain your current business metrics you have to take market share from your competitors. In an expanding market companies can grow significantly without impacting, or being impacted by, other players in the space. In a down economy it is all about taking business from your competitors. Again, understand now what you need to do to beat the competition.
  • Sitting down with your team and making it clear that the world has changed. Make sure that team members change their mindset and realize the key to coming out ahead is a renewed focus on the fundamentals, a strong emphasis on understanding your competitors strengths and weaknesses and competing hard against them, what worked yesterday won't work tomorrow, that these are challenging times, but that the potential to put the business ahead is great.
  • Not being afraid to take risks. Uncertain times are scary, but contraction alone is a questionable strategy. Be prudent with your financials but aggressive with your strategy.

The macroeconomic effects of a recession haven't changed over time, but advertising certainly has. If a business' fundamentals are sound, a down market can be a unique opportunity to capture market share and improve competitive position. In a recession, it becomes much easier to reach an audience with less clutter from the competition, and foster belief in the stability of their business and strength of the brand.

3 comments about "New Year, New Outlook: Time To Rethink The Marketing Playbook ".
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  1. Robert Jeffers from University of Southern Indiana, January 27, 2009 at 10:50 a.m.

    That a louder voice in a quieter environment attracts more attention seems obvious. Ironically, brands that can afford to advertise (relatively) more in the down-turn are the ones least at risk; brands with smaller market shares and smaller SOVs often are the ones that most need to sustain/raise their voices.

  2. Kevin Horne from Lairig Marketing, January 28, 2009 at 6:28 p.m.

    No McGraw studies from the 90-91 recession? How about from 2001? No?

    Didn't think so.

  3. Roland Grybauskas from Envisage Engagement Marketing, January 31, 2009 at 11:22 a.m.

    Good article. I would add that most marketing do a very poor job of understanding their consumers and how interactive technology has changed the marketing dynamic. Mobile, interactive digtial signage, electronic data capture, are powerful ways to connect with and engage the consumer. Lastly, how many large marketers build huge databases and then do almost nothing in terms of data mining or data base marketing.

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