What Will Happen To Marketing In The Time Of Economic Crisis?

That question must be in the minds of a number of marketing professionals these days. What do we do with marketing now in times of economic crisis? Given the economic conditions brought about by the US recession, it's imperative we ask:

1. Do we shut down marketing?
   
2. Do we slowdown on marketing?

The answer to #1 is of course NO. Do not stop marketing. Research shows that retention is strengthened in consumers particularly when marketing is done during economic lows. Why is that? Because your company emanates an image of strength and tenacity during a time when everybody else seems weak and vulnerable.

I'm inclined to respond "no" to the 2nd question too, but of course there will have to be a consideration as to the company's budget and goals. I am not averse to cost cutting when it is done prudently. However, marketing is a very complicated thing - because you spend money to make money. You spend a dollar to get a hundred or maybe even more.

Although cutting marketing cost may end up having to be an option when the bottom line becomes thin, it is nevertheless not a wise move specially if your marketing campaigns are timely and targeted. Because even if the economy is down, your market may still be nudged into the right direction. Even if you decide to lower the marketing budget, always bear in mind the opportunity cost of returns that may not be gained.

One thing about marketing is that, if people are really not interested (or if your marketing campaign does not echo the right message) they will not respond to your advertising.

Bear in mind that marketing is an activity of resonance. Prospects will respond to your message if your marketing campaign is successful - meaningful and well-targeted. Regardless of the signs of the times, people will still spend for essential commodities like food and clothing. Although they might tighten their belts in terms of non-basic expenditure such as vacations, hobbies and maybe extra services that they can still live without at the moment, they might still part with their money if they perceive the value to be much higher than the actual money they shell out.

So capitalize on your products value, if consumers see the value and/ or quality of your product then for sure your marketing will be well worth the allocated budget.

Marketing And Finance Cease Fire (Part 2 - 4 Steps To A Resolution)

Finance, while always aiming for top line is also much concerned about the bottom line as well as close measurement of returns on each type of spending. This then manifests in their desire to make sure that marketing is bridled and audited to properly show returns. This is where the marketing's planned projection comes in (also termed marketing budget, marketing plan). It will be a little more complicated and will necessitate the following characteristics:

1. Reflect core business perspectives - The requirement of each marketing campaign must align with the business itself. Branding will go hand in hand with lead generation efforts or the campaign is merely marketing faux - a feeble imitation of a campaign that will only ruin user experience (confuse prospects and mislead potential clients) as the company's overall brand is inconsistent with the marketing efforts. If you're company wants to be the classy chick in the bar then allocate time, budget, effort and marketing design that suits this image.
   Marketing communication to Finance: Align marketing spend with expected incoming revenues. Where possible, equate spend as a percentage/ portion of what is to be expected. Quantify in dollars generated the multiple effects of one campaign. How many additional leads will this campaign generate as a spill over? How much more revenue will it make in this related revenue stream?


2. Consider timing - Revenue generating campaigns in marketing aren't instant success stories. More often they have a cumulative effect that will be seen over a period of time.
   Marketing communication to Finance: Commit to metrics that can quantify success or failure. Apply IRR (Internal Rate of Returns) calculations to arrive at expected long term revenues in the context of current performance. Where possible use Finance jargon as well - they'll appreciate that too.
   
3. Don't put all your eggs in one basket - avoid allocating the entire budget to one or two marketing efforts. Although it is wiser to specialize and perfect one campaign than to launch a dozen mediocre ones, take the opportunity to explore and test other activities. These will serve as fall-back mechanisms should campaign efforts be hindered by technical issues or natural calamities that may be beyond your control.
   Marketing communication to Finance: This is a tough one as finance by the very nature of that function will always require returns on any allocated spend amount. In this case, commit to returns on any test campaign - even if it is just enough to break even with the cost. Never commit to making a profit from it though. Keep the spending to a minimum at all times. And when possible, assimilate the cost into existing marketing efforts.
   
4. Be realistic - Market research is vital to any campaign. From the point of product or campaign development (so called marketing reconnaissance), to tracking and monitoring campaign performance (this might also be termed the point of auditing). Marketing efforts and projections are more solid when grounded on baseline data. The results or revenues expected should be proportional to the allocated marketing budget as illustrated by data that has (at the very least) already been achieved.
   Marketing communication to Finance: This will be a conservative projection, but it will be real. Finance professionals are more likely to lean towards conservativism. Marketing spend is not just an activity that takes place in the present, it is an investment in the future. The revenues will not come back at once, but over a period of time as explained in point #1 - timing considerations.

Finance will be able to understand the metrics when it is properly presented. Finance after all is the mother of all mathematics in any given company. However onus is still on marketing to relay the adequate key performance indicators (KPI's) of each campaign as well as the management information to fuel the continued support.

In sum, marketing campaigns have an overriding effect. It can impact various audiences and create elements that will generate a spill over towards other goals (such as brand awareness) and other revenue generating streams. But this will occur over time and not instantaneously. Finance will need some help to understand that.

Oftentimes, Marketing and finance don't see eye to eye because of the nature of their functions. But that doesn't mean they can't get along. The key here is communication. Even if it means marketing will have to speak the terms of finance in order to relay the need of the campaigns and finance will have to understand some marketing concepts in order to understand and be able to justify spend - the knowledge transfer will be worth the effort.

Marketing And Finance Cease Fire (Part 1 - Source of the Friction)

Just like the 'cat and mouse' relationship, there has always been known friction between a company's marketing and finance departments primarily on account of marketing spend. Marketing after all spends money to make money so to speak. There is then an occurrence of natural polarity, marketing and finance usually gravitating towards opposite sides. In the past I have been hounded by one finance person after another seeking explanation as to why I spend this much in marketing, how I spend it and where are the returns.

Now in order to make ends meet with Finance, there has to be first - mutual respect. I have the highest respect for a number of finance professionals. I have grown my own analytics section in the marketing department just so there is straightforward and clear communication. One of the main proponents to instill is not just peace but understanding to explain that we are all on the same side with adherence to the same company goals.

To achieve this, communication is vital. However this communication shouldn't just be peripheral or meaningless chatter, but instead purposeful conversations that exchange ideas and transfer knowledge. May it be a debate, argument or what-have-you - it is very important that a routine dialog be maintained by both parties to arrive at agreements, directions and decisions. This though should be supplemented by plans, documentations and carefully crafted strategies.
Marketing will have to take upon itself the initiative to operate on a planned budget/ projection (and more importantly - stick to it). This isn't any ordinary money-in/ money-out plan.

Marketing is dynamic. Marketing must be equipped to respond to competitor offers, technological advances and industry trends in as close to real time as possible so as not to be left behind. I speak from personal experience when I say that it is not always easy for marketing to adhere to a strict set of rules, and this is typically where the frictions originate. Marketing's goal is always closely tied to top line targets, while these same targets are often influenced by Sales team performance as well. Making it rather difficult to capture the performance of marketing without sales - or vice versa.

The right marketing projection will then bridge the gap between Marketing and Finance and bring together mutual expectations to allow communication through this one project that of course fuels top line and protects bottom line.

No Holidays For Marketing

Marketing has no holidays. Unfortunately, holidays are the best times of the year to hype campaigns and make them more effective than they would normally be. Why do you think Christmas, Halloween, Thanksgiving, Valentine's Day and even seemingly not-that-important occasions like Mother's Day and even Grandparent's day are becoming such big deals?

I have nothing against it, it's actually great that more people start remembering dates like these, I bet the receiving end doesn't feel so bad either. But anyway on to our Holiday campaigns. It is Halloween and it will soon be Thanksgiving, followed by Christmas and the New Year.

The time to start thinking about Holiday marketing though is RIGHT NOW. I have already made a marketing budget projection for our holiday spending. Some questions to consider for the holidays:

• How much did we spend in previous years and what returns did we get from them? Will it be worthwhile to do the same this year?
• What are the current trends and market behavior leading to the holidays that might be able to highlight certain product lines?
• On what days were we exceptionally active and on which days did we lay low?
• What offers are we planning to put out? Will there be a boxing day special?

After you've considered the holiday factors and established with management the holiday strategies to set in place, here are some tips on implementation to make the most out of the holiday shopping spree:

• Segment and target your customer base, differentiate people who purchase on different holidays. An email marketing campaign or direct mail campaign to the right people at the right time can generate extra sales.
• Always be timely. Customers will appreciate you sending them a card at the right time. If you're thinking of doing direct mail. make sure you mail out the pieces with the right lead time. Nothing worse than a client getting your coupon past the deadline - I should know. I've tried.
• Try a greeting card instead of the typical letter. Although the commercial nature of the holidays have stigmatized so many people. Holidays are still good reasons for people to justify their purchasing behavior. That's the spike in spending during the holidays otherwise called holiday shopping.
• Try not selling them anything. Just being thoughtful is enough to create goodwill and encourage the customer to revisit your site every now and then.

How To Start A Marketing Budget That Works

So you’ve set up your company, you’re experts at what you do, you are the best in your industry, you’re a cut above the rest. You know it. But how about the rest of the world?

The phrase, “build it and they will come” doesn’t really apply anymore, particularly in the information super highway that plays hosts to millions upon millions of websites.

Allocating marketing spend should not be as difficult as getting your tooth pulled. It should be equated to buying stocks and bonds. It is risky but when managed properly it will bring in the returns you seek.

You want people to know your company and your business - that much you know. Now take it a step further and start planning your marketing budget. You will have to start with the bare necessities:

• Branding. First you will have to establish company brand and image. This is necessary to start off. It’s like courting - difficult to win a girl (or guy) over if she (or he) doesn’t see you or hear from you. So you will have to allocate this expense (rather sizable in the first few months, this will most likely be 20-30% of your marketing spend).

• Growth. Next, use marketing to help you grow your business. The more you are out there, tapping the right markets and creating networks, the more your client pool will expand. It will be beneficial if you incorporate expenses in marketing that will give you the extra mile. Eventually you’ll have to start thinking about economies of scale and how they can play into your budget maintenance once you’ve established your position in the market place.

• Follow-through. Marketing is useless if you don’t have what it takes to back it up. By proportion (assuming the marketing campaign is effective), the size of the marketing efforts should equate to the influx of potential clients you may have. So make sure there is adequate correspondence between outgoing spend, incoming clients and fulfillment capacity.

*Important Note*

If you find the article too long, forget everything BUT this: Marketing pays for itself. If your marketing is NOT paying for itself and returning profit then it is NOT working.

Why Spend on Marketing

When determining the investment figure on marketing, first thing that comes to mind is - ROI or returns. How much revenue will I get from this spend? While it is true that returns constitute the basic premise of why a marketing budget is set, there are also a couple of things to consider:

• Awareness. Setting up a business is futile if nobody knows about it. Marketing should be part of an initial cash out requirement. People should know that you exist

• Market positioning. It is important for the company to set itself apart from its competitors. It follows then that proper messaging be established and disseminated. This requires marketing. Not only does the company have to be different/ unique from its competitors, it also has to prove superior.

• Lead generation. While the primary goal of marketing is to let the world know that your company exists, it is also imperative that marketing brings in prospects or potential clients. This will serve as the gauge for the marketing campaign’s success or failure.

• Customer retention. As much as gathering new customers is important, so is retaining satisfaction of current customer base. Once the company has accumulated a pool of clients, satisfaction has to be guaranteed. An intelligent marketing campaign should follow suit to emphasize the client’s value to the company, not only for future revenue generation or repeat business, not to mention positive word of mouth, but also reminding customers that it is to their favor that they continue to transact their business with the company.