by Damon Segal - Thursday, 20th November 2008 - (1) comment

There are three schools of thought when it comes to deciding whether or not to keep marketing if no one is buying anything, especially in a recession.

Camp One is where you have a fantastic brand and feel you can make sweeping marketing cutbacks as the brand is strong enough to sell itself even through the downturn.

Camp Two is where you are a midsize company and are concerned that if you don't make cutbacks, or find a marketing solution that works, your business is going to suffer.

Camp Three is where you have a small business and have no choice but to find ways to save money and marketing seems like the simplest place to start.

But all three ways of thinking are wrong.

If marketing budgets are cut, all that really happens is this money is reallocated elsewhere. It then becomes a huge challenge to try to get your budgets increased again later. Even big brands require marketing through a downturn. It's a basic marketing principle: if people are not told that your service or your product are there, the chances are they will be told about someone else's and you’ll lose market share – the worst thing that could happen to you right now.

A downturn is the time to refocus your marketing budgets, not cut them. In a survey carried out by MarketingSherpa, 39 per cent of large companies in the US had made cutbacks in marketing by March 2008 whilst only 6 per cent of small business had made a cut. In fact, 20 per cent of small businesses had increased their marketing budget. There was a 36 per cent reduction in traditional marketing against a 17 per cent reduction in online marketing. You may be surprised (although I'm not) that 83 per cent of businesses maintained or increased their online marketing.

The reason for this is that internet marketing is far more cost-efficient than traditional methods and it is far easier to measure your return on investment . The biggest increases are in mass emailing the in-house customer lists, paid search (such Google adwords) and social media optimisation. Other activities like running virtual events, webcasts and interactive training will also greatly reduce strain on marketing budgets. Rather than inviting 100 per cent of your clients to a venue to see your latest product, you can show them on an interactive webcast. This saves all the costs associated with the live event, food, venue hire, accommodation etc.

By ensuring your website is well designed, not only visually but from an intelligent operating point of view, you can manage visitors through the site to your end-goal. Driving traffic to the site can only increase awareness of your business and ultimately sales. At AGI, we recently optimised and redesigned a site that eight weeks later had a 97 per cent increase in organic search traffic with people spending 58 per cent more time on the site! By tracking the revenue generated from online marketing carefully, our client has seen an increase of more than 500 per cent! The only reason marketing budgets get cut is because ROI is not measured properly and finance directors can not see the value in marketing. Show a FD results like this and it becomes a no-brainer.

Still not convinced online marketing is better than traditional methods? Think about this:

A quarter page advert in HELLO magazine is £6,435 vs a full SMO (social media optimisation) campaign, reaching 15 social sites, 12 forums, 2 press releases, 100 social bookmarks, all posts, profile management and reporting which can be done for about £5,500 per month.

Four Billboards for one month cost £3,200 vs £3,200 per month to fund a small pay per click campaign, search engine optimisation and link-building campaign.

A full page in The Sun is £55,502, read by 8 million readers a day, possibly leading to 1-2 per cent increase in traffic to a site vs £55,000 in a Pay Per Click campaign at £1 per click which will give you 55,000 visits.

100,000 postcards printed and posted cost approximately £30,000 vs 100,000 direct e-mails for less than £10,000

Online marketing gives you more bang for your buck. It will also keep your visibility at a higher level. The traditional marketing methods are often short lived – for example the advert in the Sun is simply for one day.

Cutting marketing budgets is bad. If you can't up them, then at least sustain them and get them focused on some investment-returning activity. In this unfortunate economy this is the time to grab market share. This way when the market does start to pick up, your business will clearly be ahead of the curve.

Don't be a lemming and jump into cutbacks just because you see your competitors doing so. Look at Steve Jobs and Apple: in an interview with Fortune, Jobs stressed his determination to continue to invest through the economic downturn. He said: "We`ve had one of these before, when the dot-com bubble burst. What I told our company then was that we were just going to invest our way through the downturn, that we weren't going to lay off people, that we'd taken a tremendous effort to get them into Apple in the first place."

Jobs added: "In fact, we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that's exactly what we did. And it worked. And that`s exactly what we'll do this time.

The result of that R&D was of course the iPod and the iPhone. Judge for yourself if Jobs made the right decision.
 
*Damon Segal is a marketing and SEO consultant. View his online presentation on this subject here.

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