Strategies for a Difficult Economy
The cash drain could cripple your business, but without the potential boost in sales, you may not have a business. It is a daunting question that many in control of the advertising purse strings are struggling with.
Certain companies, like IBM, have taken an opportunistic approach by increasing spending to establish a dominant share of voice in their marketplace. It is far less expensive to accomplish high visibility and awareness in an advertising downturn. However, for the average trying-to-hang-on dot-com, or the more established brands that are not making their sales quotas, maintaining or increasing ad expenses may be imprudent or impossible.
Before you decide on your ad budget, consider what you have to gain. Establishing a dominant share of voice helps most if your product or service remains in demand during and immediately after a downturn. If you can determine the most you can spend and/or the minimum sales you need to generate to keep your business on track or out of the red, you will be in a better position to evaluate and plan an emergency marketing program.
If you want to make a limited amount of marketing dollars work hardest for you, consider the following:
Reassess your goals (sales, number of users, sales per user). If you are making a radical marketing cut, and advertising and promotion have been effective for you in the past, you cannot assume that sales will be unaffected. Notable exceptions to this rule would be businesses that benefit from heavy competitive attrition and staple, traditional, consumer brands that may benefit from competitive ad cuts across their entire category. In most cases, particularly with start-ups in nonessential or luxury categories, an advertising freeze or severe cut will probably hinder sales growth.
Make sure your ad approach is consistent with those goals. I am an advocate of image-based advertising, as projected online and/or offline, that increases awareness but does not necessarily lead to purchase activity. In an ideal world, where there is ample time and money, image-based advertising adds dimension, loyalty and longevity to brands.
If an advertiser has limited ad funds with a very small window to show growth, then skip cute, clever and nebulous in favor of purchase-directed advertising and promotion. If the brand survives, there will be a more opportune time to strengthen image and brand personality. Meanwhile, focus on strong, incentive-based consumer promotion activities that include discounts, coupons, sampling and rebates.
Extend this principle to your Web site as well. If you are generating a decent amount of traffic, but have no possible way to directly benefit from the traffic during this vital period, consider adding sales, promotional or interactive components to the site or consider putting up a separate site with this explicit purpose in mind.
Focus on one or two key brand differentiators. Too many companies try to leverage a laundry list of product attributes in a last-ditch effort to boost sales. This only confuses prospects and muddies the water. Customers need one very good reason to buy, assuming that all other critical product components are at least on a par with industry standards.
If you have not found the hot button, keep searching. Take advantage of e-mail and Web-based research to better understand your prospective and existing customers. Do not launch into long-term longitudinal studies. Rely on online and offline focus groups, surveys and one-on-one interviews to determine the most compelling reasons to buy. If you have existing customer data to tap into, dig as deeply as time permits. Make sure that all research is actionable within a short period of time and reflects current market conditions.
Evaluate marketing opportunities based primarily on efficiency. The programs that have the potential to maximize short-term return for the least money should be sustained or initiated if fiscally possible. Stay away from high-ticket or prestige positions such as the Super Bowl, Academy Awards or top prime time spots and programs unless they will bring visitors, users or sales in the near term that are sufficient to justify the price. They seldom do, as most dot-coms found out the hard way in 1999 and 2000. These properties are also usually the most inelastic in price.
When considering efficiencies, there are several factors in addition to the medium or specific property, including:
• Customer retention is generally less expensive than customer acquisition, unless your base is not big enough to reach your sales goals or your products/services have a long life cycle. If your market is fresh produce or detergent, there are many more selling opportunities over the course of a year than if you are marketing refrigerators or cars.
• If you have identified several sub-targets, rank them in order of the most viable high-opportunity group to the least. During a time in which you are forced to cut funding, cut programs oriented toward the least viable subgroups first.
• Push ad properties to provide you with the best rates available and find representatives who will work with you from the beginning of your ad program. Traditional advertisers are down, and emerging media advertisers are desperate. Most online properties, or even e-mail list companies, will provide you with deep discounts through bonusing impressions and names if you are not satisfied with results. It is a buyers' market. Take advantage of it.
• Use the method of payment, either cost per thousand, cost per click or cost per action, that is most favorable and provides you with the best chance of achieving success. Test the different methods and determine what works best. Then try to use that method everywhere.
Monitor any measurable components of your ad program on a daily basis, if possible. This will enable you to modify your plan quickly to flush out underperforming vehicles and reallocate unspent funds to advertising and promotional programs that are achieving results. If you are not satisfied with the performance of all ongoing programs, be open to new alternatives rather than downplaying the importance of advertising.
Concentrate outsourced vendors as much as possible. The jury is still out on whether traditional agencies are able to handle new media, or new media agencies can handle some traditional media. A case can be made for keeping the two active under certain circumstances.
However, if you are looking at a short window of time to increase sales or show a strong return on investment, you are better off reducing your number of vendors, preferably to a single agency that handles all media. This will save you time evaluating which agency's proposals for new programs or spending are most valid, and it will facilitate a more integrated, cross-media approach. The critical assumption here is that you must find a single agency that is capable of handling all creative development and media placement across multiple platforms without compromising quality.
Consider hiring part-time/short-term marketing experts/consultants. Many qualified marketing professionals are out on the street. If you are a small firm and cannot afford the luxury of in-house, six-figure, full-time employees with benefits, solicit the services of someone with the expertise to help you strategize, develop and place advertising and promotions. Be upfront with time and budget constraints in addition to specifying what your company needs to accomplish through marketing. If all goes well, you can upgrade the part-timer to full time when the ship has been steadied. There are several sites, including elance, that allow you to bid out a job online. You must check references thoroughly, however.
Do not forget the extremely inexpensive or free, do-it-yourself programs. Register on the major search engines, and if that does not work, optimize with an outside firm. Experiment with pay-for-position search engines such as GoTo, Mamma.com and others.
Take a stab at writing a few releases about your company. Place them with free services and try to find other relevant news services and publications that may be interested in your story. Even if your product or service is not unique, you need a fresh angle to get your story placed.
Set up as many reciprocal linking and affiliate partnerships as you can, but prioritize your efforts according to the likelihood of success and relevance of each partner site.
If you are still not comfortable with your marketing direction, there is a plethora of information available on business advisory sites like Office.com, Onvia, Tailwinds, bCentral and many others. Be specific in searching these sites for a particular problem you are looking to solve or a vendor you are looking to work with.
If you are cutting back on resources, that is fine, but never do so at the expense of the brand experience. Sacrificing product or service delivery, particularly in areas that you are establishing a competitive advantage in, could do irreparable long-term harm to your brand.