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Questions…on Marketing in a Down Economy with Kirti Sawhney Celly Whether it’s been seen in the slow demise of the newspaper industry or dismal reports of TV advertising figures, there’s no mistaking the quick tightening of marketing purse strings for companies big and small during this economic downturn. But here, Associate Professor of Marketing Kirti Celly explains why that reaction might not be the right one as well as what every company regardless of size must do to maximize their marketing dollars now. Is everyone tightening their marketing belts right now? Most are. There’s definitely been a cut back on marketing budgets, but on the other hand, Procter & Gamble crossed the $5 billion mark in terms of U.S. media spending last year for the first time ever. That’s the only company that spends that kind of money on advertising, but I won’t be surprised to see that figure hold steady through the recession. Why do you think Procter & Gamble’s media spending might increase now? If you look back to the Great Depression, Procter & Gamble used that time period to build their business. They invested dramatically in radio advertising and shows. Many historians would even argue that the major growth of radio came through P&G’s investment in the medium during that time. They sponsored programs, many in the middle of the day, which is why they’re called soap operas – since P&G makes soap. The reason P&G invested so heavily in marketing in the Great Depression is that they saw it as an opportunity to build loyalty and business. Chevrolet did the same thing, continuing to invest in print advertising during this period and it’s when they made their first gains against Ford. In his book, Good for Business: The Rise of the Conscious Corporation, Andrew Bennett, strategy chief at a leading global agency, makes just that argument. In times of recession, consumers are more than ever looking for value. So from a marketing perspective, if you can reach your prospects with a promise of value that your products can then back up, you’re going to acquire new customers and build incredible customer loyalty among existing customers that will pay off long after we get out of this slump. That’s much easier for a company the size of P&G or GM. Can other companies really benefit from continuing to spend marketing dollars now? Liquidity is certainly an issue. And it’s easier to just retrench if you’re a small shop with no established, long-term marketing goals. However, if you can build your brand during a recession you can come out smelling like a rose. The difference with this recession is that companies need to be even more focused on having an integrated marketing effort and message. Why is the idea of an integrated marketing message, which has been around for a while, even more important now? To help your message go beyond its marketing dollars; to develop word of mouth and publicity worth well beyond the initial investment. For example, Axe deodorant had an integrated campaign around what they called, “The World’s Dirtiest Film.” The video was created virally by folks on the Internet and it generated so much feedback and so many views on YouTube, it has far out-lived the initial goals. How can companies build integrated campaigns that will work? This hasn’t changed. You have to engage in a dialog with your customers, build community. What has changed is how to have that conversation. The idea of separating digital media from everything else is in the past. For example, I was reading an interview with one of the senior managers at Unilever, one of P&G’s biggest competitors. She talked about how she had opened a Facebook account and made all the others on her team do the same. Not because she wanted to be on Facebook, but so she would understand what was going on in the minds of her younger buyers. Another example is the MINI-Cooper campaign. BMW used digital billboards that communicated personally with MINI owners on the road through a device attached to their key chains. When the owners drove toward the billboard, the sign greeted them by name and displayed a few other comments about their driving, occupations or MINI ownership. The creative billboards quite literally grabbed customers' attention, but, more importantly, fit with MINI's quirky brand image. It built interest in the MINI while building bonds with existing customers. Isn’t getting creative with such campaigns also riskier? At a time when taking risks can be pretty scary? If there is one common thing every company must do it’s to think creatively with their marketing messages right now. Sure, there’s some risk involved, but the basic ad in the newspaper or billboard just isn’t going to cut it. The idea of return-on-investment suggests there’s some risk involved in every marketing dollar spent – it’s not like every campaign is equally effective or ineffective. And that’s another thing companies are doing now: keeping closer watch over that ROI. Now more than ever, making sure you get something out of your marketing dollars seems like a logical trend. Absolutely. Companies have found creative ways to increase that return, reduce waste, and here’s the biggest thing: measure that return. Increasing accountability and measurability will continue to be more and more important. So Web metrics – measuring return and click-thru customers – are doing really well because marketers are under even more pressure to show that what they’re doing has a direct effect on the bottom line. Of course, that’s harder to do if you’re focused on a branding campaign in order to build long term customer relationships and brand equity. What about the smallest of businesses? The mom and pops? Do the ideas of getting creative with their marketing and focusing on ROI really trickle down that far? Sure. Just like Fortune 500 companies have to be more creative, smaller companies need to find ways to get their messages out. Networking with government organizations, participating in chambers of commerce, sponsoring the association golf tournament – all of those things cost money. What will separate companies during this time are those that are able to position themselves as being able to create and deliver value for their customers. Examples for small businesses? It can get back to that idea of building community and word of mouth, rather than going from one sales call to the next. You’re showing up at farmers’ markets so people know your company. You’re involved in the local parade. You’re sponsoring some kind of workshop that’s free to the community, which then gets in the local paper. Things like that have always been used, but we’re going to see more of them, because proprietors will recognize that if they don’t have cash for marketing, then they can invest with their time. And as for that idea of measurability? An easy one is including a direct response element in all your advertising: Give customers an incentive for mentioning they saw an ad, say a discount or an additional service, so you know what had value and what didn’t. Any last thoughts? This downturn will make customer retention even more important. You don’t need to tell a business owner that it’s easier to retain a customer than it is to find a new one. So in this downturn, customer loyalty and retention is more important than ever. If companies have to make drastic compromises, they’ll make sure they’re keeping their current customers happy with memorable experiences, unbeatable service, repeat purchase incentives, and loyalty rewards – things like rewards for buying another airline ticket. I think we’ll see that play out quite a bit in the months to come. |
