Is now the time to add or cut advertising?
Some people are telling me to cut my advertising as a cost saving measure when times are tight. Others recommend spending more during the downturn. I know that in past recessions, customers' behavior changes (i.e. clipping more coupons). I also remember when large companies like Nike increased advertising resulting in record sales during a downturn. Is there any indication or sound advice on the idea that now is the time to increase our advertising efforts?
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.Before I get started, let's make it clear that both of those efforts -- coupons and major media advertising -- are both ways to develop business through marketing.
I'm going to defer to a mastermind speech that Seth Godin gave back in 2003 simply because it made sense at the time, and makes even more sense now.
Godin said that marketing is changing, products are becoming variances of the same thing over and over and to get ahead you have to separate yourself by being unique...nope...REMARKABLE.
Here's the link to watch his speech: http://www.youtube.com/watch?v=xBIVlM435Zg
Here, in effect though, is the answer to your question:
If you have a product that is well producing (and needed by consumers and/or businesses) over the projected normal sales, a reduction in your marketing budget may suffice and your revenue may remain stable.
If your product is producing normal revenue for the last year, you may need to rethink your budgeting for your marketing efforts. This would mean analyzing all sales and marketing channels, seeing which ones are converting and creating the greatest return on investment (ROI). Then you would need to either boost investment there, or try to figure out how to boost conversion from the lesser channels, not by necessarily investing more there, but perhaps changing the message there. Sometimes just by repositioning your product and tweaking your brand (customer experience) you may create revenue where there once was little or none.
Remember, just because your target market has always been 30- to 35-year-old C-level executives, that doesn't mean that newer, younger C-level executives wouldn't be interested in what your business has to offer. Likewise, for the mom and pop businesses, don't think the kids from up the block don't want to shop your store -- they very well might.
Now here's the kicker -- if you have a product that is competing in the marketplace against similar products, you NEED to figure out how to make your product or service the "purple cow" of the marketplace.
In other words, just because you have the greatest widget -- let's say, sliced bread -- that doesn't make it the most remarkable product that everyone will want. And remember, as you noticed, Nike spent millions to generate that record revenue...do you think they'll need to do it again? What do you think their actual ROI was?
Nike is the well known "purple cow" with just about everything they bring out. However, they are known in particular for a certain style of shoe. Everyone that knows their brand will rush to the store to get what they come out with. So, millions spent, millions earned. However, if they came out with a new running shoe to compete with say Asics, or Reebok, do you think they might need to invest a bit more to get that particular shoe noticed? Absolutely.
Bottom line: If you're going to invest in marketing now, (and yes, it would be a good idea to do so) make sure it is in something that is remarkable, and will have everyone standing and taking notice.
Please note, this doesn't mean go out and spend millions on advertising, if you have the right campaign (I'm a huge advocate of low cost, no cost marketing) with the right message, you can turn one heck of a return on any marketing investment.
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