In the past, we’ve written about speculation of a recession and how the current state of the economy will affect online marketing.  Luckily for us, MarketingSherpa came out with a report, titled, “Marketing During a Downturn” that sheds light onto how marketers are feeling the effects of the economy and what they are doing about it.  Because online marketing was barely around during the last recession, there is little research detailing the affects on the industry.  This study provides some good insight on what is happening now in many companies’ marketing departments and what they plan to do in the forthcoming months.

1. The first major finding is that large companies are cutting their marketing budgets while small companies are cautiously growing them.  In the survey that MarketingSherpa conducted, 60% of large firms are cutting their marketing budgets compared to only 13% of small companies.  On the flip side, 34% of small companies said that they have or will be increasing marketing budgets compared to large companies at only 21%.

The logic is definitely there. Large companies spend more on advertising, therefore, when things get bad they tend to make cuts in marketing.  Meanwhile, small companies don’t spend as much on marketing so they don’t need to make as big of cuts.  Another reason why small companies are growing their marketing budgets is because they have a small market share; they’re going to need to spend more in marketing to gain more of it.  And what better time to do that than now?  Robyn Sachs, president of marketing communications firm RMR & Associates was quoted in an article, “Recession Marketing: Avoid the Fear Factor”, on the ClickZ Network saying, “Each dollar spent in marketing communications online, in print, whatever, will speak louder, go further. You have more negotiating power with publishers.” She then goes on to say, “If you want to look at the silver lining with a recession, it’s a golden opportunity to have your dollars work harder and better.”  During a recession, your competitors are cutting their marketing budgets; meanwhile, publishers are slashing their prices and extending special offers.  A recession is a great time to gain market share…and on the cheap.  Good call, small companies!
 
2. Another interesting finding is that marketers are falling away from brand marketing and focusing on marketing that is more measurable and reliable in terms of ROI.  30% of survey respondents said that they are increasing spending on marketing that is trackable while only 19% are increasing budgets on brand marketing.  With all this talk about a recession and budget cuts, it’s no wonder that marketers demand advertisements that allow them to track their investments through results.

3. The study also reported that marketers are boosting their online spending while decreasing their budgets for traditional marketing tactics.  The report found that 38% of marketers are increasing their online budgets while only 25% are increasing their spending for traditional tactics.  

This data is backed up by the fact that TV and radio ads are two forms of media that are getting the largest cuts.  59% of respondents are decreasing their investments in both of these areas.  Why the shift, you may ask?  Although TV and radio ads are considered great branding techniques, they are still expensive and not as measurable or reliable. With online marketing, this is just the opposite, so it’s no wonder that marketers have increased their investments in this area. 

The main takeaway is that even though we may be in a recession, companies shouldn’t make the same mistake as their competitors and cut spending in marketing.  They should, however, increase or maintain their current marketing budgets and negotiate with publishers on pricing and special offers.  Although, consumers may be spending less because of the current economic situation, it is important to continue to have a presence in the consumers’ eyes — which allows a company to snag market share easier. As David Sable, Vice Chairman and CEO of Wunderman, a large consumer-focused marketing agency, was quoted saying in the report, “Even if they’re not buying today, it doesn’t mean they won’t buy tomorrow.”  Also, invest in forms of advertising that are trackable and can measure ROI.  This ensures that a company will know whether or not their marketing campaign is working and what kind of return they’re getting.  Besides, if a company is going to make an increase in their marketing budget, they might as well be smart about it.

Although the MarketingSherpa report gave some clear insight into the recession right now, and how marketers are being affected, the real answers to how each individual company will ride out the storm lies within tactical planning and strong campaigns that can be shaped to fit the needs of the ever-changing consumer. But one thing is for sure, online marketing may be just the blessing in disguise needed to get through this recession.

» You can leave a comment, or trackback from your own site.