Another area in which it can be tempting to slash costs in a recession is marketing. The marketing budget tends to take up a lot of space on a business’s list of outgoings and it sometimes feels that those outgoings are strangling your margins. After all, what does marketing do exactly? What revenue does it bring in? It’s just there because everyone else does it, right? Do those guys in marketing actually do anything all day long?
As we’ve discussed in previous posts, we believe that SMEs are the key to returning to economic growth and that small business innovation can’t happen without taking a chance or two. Increasing your marketing efforts could be one such chance but it could also mean doing more with less – not marketing bigger, but marketing smarter.
So, before you get out that big red pen and start slashing budgets left, right and centre take some time to consider what marketing is, how you’re doing it and how stepping up your marketing efforts could actually strengthen your market position in an economic downturn.
What’s it For?
Marketing encompasses a range of activities from billboard advertising through to Tweeting. We’re not here to tell you what method is best for your business – that all depends on what it is you sell and who your target audience is. What we want to convince you of is that marketing is effective and that it can bring in much more than it takes out – especially in a recession.
In a stagnating or shrinking economy large companies will cut their marketing budgets. But large companies probably had bloated marketing expenses in the first place – sponsorship of sporting events and TV commercials don’t come cheap. But that doesn’t mean you should cut yours as well. Instead you should be ready to exploit the opportunity that this presents.
What opportunity? I hear you cry. Glad you asked.
Marketing has to happen somewhere – in a physical space like on billboards or newspapers, in a digital space like on TV or on the internet. There’s only so much of this space that people pay attention to, that registers on people’s internal radar as they go about their day. During boom times we’re literally bombarded with marketing messages 24/7 but as large corporations spend less on marketing they start to retreat from those spaces, leaving more room for smaller companies to start inhabiting that space and making their messages more effective (due to reduced competition) when they do.
And that’s not all. Lower demand actually causes the price of advertising to drop. Never will you have a cheaper opportunity for, say, getting a TV commercial made than during an economic downturn.
How do I do it?
Now that we’ve given you the reasons we think that marketing shouldn’t be the first casualty of your cost-cutting exercises, what advice can we offer on how to spend your marketing budget effectively?
It all boils down to two words: plan and measure.
Whether you’re taking on a marketing company or keeping it in-house, your marketing plan should be thorough and well researched. Delve deep into your customer data to work out how your customers behave: what forms of media are they most likely to pay attention to? What’s their typical job title, age range, income or marital status? Your specific plan will depend heavily on the insights you glean from information that customers have given you in the past so if you haven’t been collecting this kind of data before, start now!
Your plan should set out exactly waht it is you’re trying to communicate to the customer, which channels you’re going to use to get that message out and should include clearly defined objectives and goals. ‘Increase number of customers’ is not a clearly defined goal. ‘Make and publish 5 online videos in February’ is. One size fits all plans won’t do – make sure you have separate plans for the short, medium and long term.
Of course, drawing up a marketing plan is just the first step. Actually implementing it well is probably the more difficult part. In order to succeed you’ll need to make sure that the plan’s aims and objectives are communicated company wide and that everyone understands them. This is where a small company has the advantage over the corporates – in an SME everyone can get involved in marketing efforts. For example, using real staff in promotional videos not only saves money but customers love it too. Make sure everyone’s on board and understands their role.
Now we come to measuring results. Measuring return on marketing investment (ROMI) is a fairly new area of study but there are several god books on the subject like Marketing Calculator by Guy Powell. It’s a fairly difficult task to accomplish as there are incidental effects of marketing that can’t be directly measured – like increased brand awareness. What monetary value can you attach to such effects and how do you measure them? It’s not easy.
This is where online marketing comes into it’s own. Tracking tools like Google Analytics allow you to see exactly how many new visitors have been attracted to your website and how many of those visitors turn into customers or prospects. You can also see how they got to your site (e.g. via a link in an email newsletter) making the task of attributing effects to different marketing channels much easier.
There are ways to achive this kind of tracking offline as well. Discount codes which you can change across different advertising methods, specific phone numbers or barcodes can all help you pinpoint exactly how a new customer heard about you. In order for such methods to work though, you have to get your staff to ask and record the information.
All these measurements can then feed back into your marketing plan, allowing you to scrap what isn’t working and focusing your efforts on what is.