Where are companies investing their marketing dollars as the economy turns down? Two blogs in my reading list posed this question recently. One is Jeremiah Owyang and the other Marketing Sherpa.
Their posts stimulated my own post on where companies are likely to gain the greatest bang for their marketing bucks and why.
To set the stage, we'll start with some wake-up results from Marketing Sherpa and then I'll segue into answering some where and why questions posed by Jeremiah.
First, Marketing Sherpa undertook surveys of companies to determine a real-world answer and they shared the results in one of their Marketing Yak podcasts. They found that 53% of large companies will cut marketing budgets while only 7% will increase. In the SMB arena, fewer companies are making immediate changes in their budgets but 36% expect to downsize their marketing departments.
The line items in marketing budgets taking the biggest hits will be traditional marketing (print and broadcast advertising) and more companies will move to online outlets from traditional ones. And while online marketing initiatives will be decreased, it will occur at a much lower differential than in the traditional line-items. In fact, for some companies, online marketing initiatives will expand at the expense of branding budgets.
Of course, the cost-cutting in traditional marketing is part of an ongoing multi-year trend as is cutting travel to trade shows.
Even before the downturn, it all came down to costs versus benefits and this is more punctuated since the economy started its meltdown. Online marketing carries a lower cost relative to print and broadcast mediums but if executed well can carry an ROI as high or better.
Jeremiah asked some thought-provoking questions in his recent article Four Social Media Questions You Must Answer During an Economic Downturn. In conjunction with the Marketing Sherpa article, I'd like to throw in my answers to where companies can effectively gain marketing value during the economy's trashy period and why.
1) Is social media usage going to increase or decrease during a recession by consumers? I believe it will increase. With less discretionary money to spend on entertainment, we can expect more people to stay at home and online.
Additionally, with corporate travel budgets more constrained, we can expect much more online sales efforts in terms of public and private webinars and meetings. There are so many technology tools available today that allow folks to create podcasts and even videos at low cost, I think we'll see more companies prepare online demos, of various lengths for viewing on their websites.
2) Will brands and marketers increase spending on media that is generally unproven? Traditional marketing, including trade show attendance, has a proven track record but it carries a high cost associated with it. Online marketing, especially B2B communities, are still a newer pathway to marketing so it's ROI is less defined than the traditional. However, it's cost is also much lower.
Marketing Sherpa stipulated now could be a good time for aggressive marketers to move their companies forward. I agree -- especially with online media and a more captive customer audience (because of increased online activity due to more constrained discretionary spending).
SMBs can especially benefit from expanding their mix of online marketing in their budgets because the outlets tend to level of the playing field with larger corporations.
This is a bit of a digression but take text ads, for example. They're as level as you can get since they don't carry bells and whistles like hot-shot TV ad campaigns do. That means small companies can be as effective with their ad content a large company. Admittedly, though, smaller companies can't afford to spend as much per keyword as their big counterparts. There are advantages of being a little lower in the advertising list of a search engine though. You tend to get less lookey lous clicking on your ad and you can help this along with well-targeted ads and keywords.
As for websites....well sure, the companies with bigger budgets can build bigger, badder websites. However, social and B2B communities are about collaboration and connection and so this can well be a medium where bigger isn't better. What will count most is which companies do a better job of reaching out to their communities, be they customers, partners, and even employees.
Something for companies to consider, though. You will need to invest in building that community. Part of cost is the medium itself...websites and technical solutions to support blogging, group forums, etc. Fortunately, there's wide array of solutions and price tags to choose from to fit all budgets.
Another part of the online budget -- and it's the bigger chunk -- needs to be people who can contribute content to your communities. If you're community is going to grow, and your company is going to be a voice of influence within it, then you'll need to allocate budget dollars for either internal or external resources to actively participate or create content for your communities.
Check out this previous article for more information about resource requirements.
One final thought on this question. One of the requirements of we marketers is to find effective ways of measuring the results of online marketing. Driving traffic to a website is only the starting point. Ultimately, the metrics that will count the most are those that measure revenue-generating results. And that's what really counts for traditional marketing too.
In online terms, these measures include lead generation, actual online purchases, or ad sales (for those sites that generate revenues from ads).
What this means is that companies should look to tools and solutions that will help them track conversions and from any medium is best.
3) Will these be tools to improve communication and collaboration within the enterprise? I think that in general we'll see more companies investing in tools and technologies that will keep more employees sitting in the office rather than in hotels and airplanes.
Online media will gain but so will other solutions and providers that offer other communication avenues. I'm thinking along the lines of companies that specialize in offering unified communications solutions (email, IM, video conferencing, etc).
Team up online communities with unified communications and you have a potent combination to lower costs. For example, rather than holding a large employee or customer meeting at a hotel (complete with room rental and refreshment costs), it might make sense to do video broadcasts that will allow employees or customers to view them from their desktops. With today's technologies, you can still give attendees the means to ask questions to the presenter so your audience will feel heard.
I think the down times requires companies and their staffs to be more creative in wringing the most out of every marketing dollar and generally achieving results as cheaply as possible. In many ways, the biggest winners of these tough times may be smaller companies who live with the necessity of being creative on itty bitty budgets day in and out.
They already know it can be done.
Alrighty, now that I've shown you mine, I'm interested in your thoughts. Where do you believe the best marketing opportunities to be during these tough times and will social media (collaborative communities) be included in the mix?