Last week, one of my clients instructed me to cut back, actually to cancel all advertising. Wow! It made me pause to think.
What if all of my clients did this? Certainly that would mean I’d be a gonner. But, wait, what would happen to my clients, if they did stop advertising? Would cutting their advertising spending affect their businesses?
With the big turmoil in the US financial market, I suppose, it would only be a matter of time when the ripples of this tsunami would affect business in Australia, despite the different financial regulations and mortgage market we have here.
John A. Quelch, a professor at the Harvard Business School notes that a recession is not a good excuse to cut back on advertising. “It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return-on-investment at lower cost than during good economic times,” he writes in a recent issue of “Working Knowledge,” an e-mail newsletter of the Harvard Business School.
Other studies on advertising spending in recessions have shown that brands that cut back on advertising suffered loss of market share as Quelch notes. Those that continued or increased their marketing communication spend kept or increased their market share. Yes, but that’s B2C marketing, right? Yes, and this will similarly apply to B2B marketing as well.
In B2B, we note that one reason that a marketer needs to advertise is because the competition does. Not the best reason, but I’ve observed clients cutting back on their marketing spend and had this reinstated, when rumours in the marketplace that the company has gone bust started to circulate.
Again, not the best reason, but one to consider.
When things get tough, let’s face it, you (and your competition) will be working working harder to get more sales. Because, just as you may be cutting back on expenses, so will your customers.
So, should you stop spending on advertising? It’s a definite NO.
Cutting back or getting more from your spending is the first approach. This applies to expenses throughout the enterprise, but let’s stick to advertising and marketing communication.
In B2B companies, part of the marketing spending covers the direct sales calls. This is one area that has to be intensified. When the gonig gets tough, the more one has to be closer to one’s customer. Before he/she cancels a purchase of one of your products, you can respond with an offer of something extra, improved delivery, or whatever, with a lower cost the last consideration.
Reviewing call rates, cost per call, frequency of calls, improving call efficiency, time spent per call and so on are part of this study. Also consider the area of prospecting. Whilst out calling on customers, prospecting should be part of that effort. What about getting referrals from your customers. If they’re happy with your company, its service and products, surely they would be happy to recommend others to you.
With the competition also feeling the pinch, this is the time to get closer to your customers, so watch that you don’t neglect your customers. When one has to fight for every sales dollar, you can bet your life your opposition is also trying to get more sales from every source–including your customers.
And, what about your spending on advertising?
Get more for your ad dollar. Getting more bang for your advertising buck means intensifying media that give the best results. Those that do not produce results can be cut back or just dropped. This depends on your specific circumstances.
It’s good to note that the best bang for buck is still found in the web media. One area that can give good results for a little spend is in sponsored links in search engines. Spending a few cents to a few dollars per click through makes sense, especially considering the immediate results in web visits.
Of course, your landing pages should be set out to help the visitor get the best information and to contact you directly from the visit. (But, that’s a topic for another post.)
Of course, generic searches should be optimised to take advantage of keywords used by searchers looking for information leading to your site. (Again, I’ll cover this in another post.)
A review of costs, getting more for your spend and getting ahead of your competition should be some of the strategies you can adopt when times get tough. And, as to just stopping all spend, this comes at great risk. It’s a bit like the proverbial ostrich hiding its head in the sand.
When times get tough, you have bit the bullet and put in the effort to get on top of the game. Not telling your customers (or prospetive customers) that you have something great for him to consider, or to remind them that you have great product he’s interested in is like raising the white flag.
If you decide to surrender, be prepared for the consequences.