Marketing When Money Gets Tight
Even as Congress sends its so-called stimulus package for the president's signature, and even as the stock markets edge into the clinical definition of a bear market, whether or not America is officially
in a recession has yet to be confirmed. Still, fortune favors the bold -- and Forrester Research has some suggestions for bold marketers who want to spend their dollars most effectively in a time of tightening budgets.
A new report, "Strategies for Interactive Marketing in a Recession," authored by Josh Bernoff, vice president and principal analyst at Forrester, suggests that, given the current circumstances, measurable results are vital and social applications will take off.
In his blog, Bernoff assures businesses and consumers that, compared to the fin de siecle
period following the dot-com flop, "things are different this time." (During the dot-com heyday, he writes, "ignorant money...[was] chasing illusory opportunity.") The current economic distress, he adds, is largely attributed to the mortgage crisis -- and technology may be one of the few tools capable of helping businesses find their way through the difficult times.
"In this environment, people should put in place measures like number of contacts
, increased likelihood to buy
-- measured by surveys -- conversion rates
, and actual sales
to prove that interactive techniques are working," Bernoff says, defining "interactive techniques" as marketing that relies on "interactive channels like online, email, social applications, and mobile phones." While all marketing is notorious for being difficult to measure, Bernoff warns that, in the absence of strong metrics, "don't be surprised if your interactive budget gets cut."
The flip side can be surprisingly beneficial, though. "Done well, [interactive marketing] allows interactions between customers and the company doing the marketing," Bernoff says. He also predicts strength in more-targeted forms of advertising: Television will turn to online video and Flash ads, pay-per-click ad spending will increase, and email marketing will flourish.
Bernoff's predictions about smaller budgets, however, are not universally echoed by other experts. Some studies released within the last month have suggested that marketing spend remains robust:
However, the instability of the market suggests that any projections may just be speculation at this point. "It's difficult to know if there's a recession," Bernoff says. "And even if there is, marketers and marketing budgets have not yet adjusted." He predicts the next six months will be rather turbulent for marketing departments as they adapt to economic demands; this reaffirms his initial warning that "those running all marketing programs, and especially interactive or experimental marketing programs, [need] to prepare their rationales for when the budget cuts begin to get considered."
As a result, Bernoff suggests that social applications will allow marketers to get the best bang for their buck. He lists three reasons in his report:
- They're effective: Social applications such as Facebook and MySpace leverage word-of-mouth marketing, and numerous studies have shown that people are more inclined to trust "people like me."
- They're cheap: It costs nothing to start a Facebook group. ("Cheap" can be a relative term, as well: Bernoff adds the creation of a company- or brand-specific customer community could cost between $30,000 and $300,000 -- a relatively modest investment for large enterprises with potential for high returns); and
- They're focused: Social applications are targeting consumers actively in the consideration stage, rather than merely building awareness.
When speaking about budget, the same set of basic challenges apply to all businesses, regardless of size -- but there are also significant differences. "Large enterprises with marketing budgets in the millions have planners and market mixes to consider -- it's a complex decision," Bernoff says. Smaller companies are more nimble and thus have the ability to adapt more readily. Because of that agility, Bernoff strongly advises small businesses to devote resources into blogs, Facebook, and other social programs. "If you have 500 customers, and they all share that they love your product, you have a community -- and it's difficult to reach that community with traditional advertising."
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