Marketing Through a Downturn | BTalk Australia

(8min 57) When economic times are tough there’s a tendency for people to slash their marketing budgets. On today’s BTalk Australia Michelle Gamble, a director at Marketing Angels, tells Phil Dobbie that this might be the wrong thing to do. Instead use the downturn as an opportunity to grab more market share.

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• Today’s Transcript

Phil Dobbie: Hello, I’m Phil Dobbie and welcome to BTalk Australia.  Today, marketing in an economic downturn.

When the economy is like it is, most companies are forced to cut back spending. Kevin Rudd is telling us not to layoff employees, but he still wants us to pay our company taxes, of course. So marketing is often the first to feel the might of the CFO’s red pen. But irrespective of the size of the company, is cutting back on marketing costs or cutting it out altogether the right thing to do? Well, let’s ask Michelle Gamble, she’s a director of Marketing Angels, which is a marketing consultancy firm. It’s a difficult problem, isn’t it Michelle? What do you think the answer is?

Michelle Gamble: I think rather than cut back, I think the first thing that companies need to do is actually to review what they’re currently doing. So what we find with a lot of smaller organisations, in particular, is that they tend not to be very good at tracking the effectiveness of their marketing. And I think rather than just take a red pen to the marketing budget, it’s best to look at OK, what are we doing, what’s worked, what hasn’t. And how do we need to increase our return on investment on marketing versus just cutting back.

Dobbie: Now you think that’s a factor for small organisations. I think many large organisations might be guilty of that as well.

Gamble: Exactly, I think it’s across the board.

Dobbie: So, of course, if it was as easy as that, everyone would have been doing it all along. So what sort of things should you really be looking for, because you get back to that whole thing if only half of my advertising is effective, if only I knew which half it was.

Gamble: Yes, exactly. Well I think the first thing you have to do is set some measurements. So look at all your marketing and say OK, how is this being measured? And if it isn’t being measured, find a way to measure it. So you can measure things like brand awareness, which sounds like a pretty vague thing to try and measure, but you can measure it in different ways. Like for instance, you can look at how many people when they search for your particular business on the web, type in your business name directly into their browse versus use keywords on Google or those sorts of things. The more people that type directly into the browse, the higher your brand awareness, those sorts of things. The amount of phone calls that come into your business, all of those sorts of things. So find a way to measure your marketing activity. And the things that you can’t measure, that should be probably where you’re looking to take the red pen.

Dobbie: Right.

Gamble: And look at ways that you can increase the cost effectiveness. So rather just throwing money into advertising, you know, how can you create perhaps channel relationships with other industry bodies or organisations who may be a potential channel to market for your particular product or service? Or how can you use online marketing more effectively. Things that are measureable and more trackable.

Dobbie: Now you mentioned brand effectiveness. Now I suspect brand is one of those, you know, it can be seen as a bit of an airy fairy word, it’s not directly related to sales. Does that mean we should be forgetting about brand at this stage and focusing more on things which are going to bring immediate sales to us?

Gamble: Ideally what you what is to be still building your brand, but to make sure that any brand awareness activity that you do actually leads to sales as well. I think in this environment, it’s actually a time to really build brand awareness and take a lot of market share. You might not grow a lot in revenue, but you may grow a lot in market share if you keep your brand out there and top of mind. Because a lot of people will just stop marketing altogether, which means that you’re talking in a less noisy space.

Dobbie: So you share a voice. There was, I wish I could remember what the brand was, but I think it was either during the first or Second World War, there was a type of soap that you couldn’t get, but it kept on advertising. And it went from being not a particularly dominate player in the market before the war and after the war because everyone was being so exposed to the advertising, they all of a sudden became a very dominate brand.

Gamble: Was it Pears or?

Dobbie: Yes, I think it was.

Gamble: I think it was Pears.

Dobbie: I might have been Pears soap. I think it’s a great example isn’t it really? We’re not going through a war, but sometimes it feels like it. And so it’s a double whammy of course for many businesses, isn’t it? You know they’ve got fewer customers and those that they do have are probably spending less. So how do you get around that problem? Because you might be spending the same amount of marketing dollar, but getting a poorer return on it.

Gamble: Well I think this is where people who’ve been complacent with their marketing during the good times, these are the guys who are really feeling the effect of that at the moment because they’ve relied traditionally on repeat business and word of mouth and haven’t actively gone out there and sort of tried to increase their reach and obtain new customers who haven’t heard about them. So there are a lot of businesses who are finding themselves in that particular situation at the moment. One of the first things you can do I think is go and talk to the current customers you have and find out how the downturn is affecting them. So they may be spending less because they need a different type of financing arrangement for buying your product or because they’re looking for a slightly cheaper version of what you’ve got. You may be able to reproduct size or if it’s something new to the market. So you know you want to try and hang on to those current customers and there may be a way that you can still get them to maintain their spend, if you can be a bit more flexible with your offering and also payment terms and those sorts of things.

Dobbie: Yes I think that’s a really good point isn’t it? You’re not necessarily selling the same old stuff. And there was an interesting story that Pizza Hut’s now, I think this is an interesting example, they’ve announced a $4 million advertising campaign to start promoting a new pasta menu. So they reckon they can take business away from other restaurants as people trade down and they’ve put a lot of money behind it. So looking at what you’re selling and adapting that product for the economic times.

Gamble: For the changing times, exactly. So that’s one way. And then I think the other way is to look at what you can do that’s really cost effective. So you know ways that you can start to get the word out there without actually having to throw a lot of money and expensive advertising. So things like networking. So tapping into your own networks, going along to networking events, perhaps creating some of your own events with likeminded businesses who target a similar kind of market. Also looking at some of the online networking tools that there are. If you’re not on Facebook, look at creating a community around Facebook. There’s a great online sort of business networking tool called LinkedIn. Perhaps write a blog. Those sorts of things are just going to increase your visibility overall. If you don’t send out a newsletter to customers, do that. Really focus on getting more people into your database for your networking activities or any other way that you come across, getting new prospects or contacts.

Dobbie: And I’d assume also if you’re using traditional advertising media, you’re probably getting a better price for it right now as well. If you’re not, you should be.

Gamble: That’s exactly right. So you’ve got a bit of leeway on negotiating. So don’t always accept the first price. Make them an offer on what you’re willing to pay and see what comes back. And sort of look at too at how you might be able to combine some advertising with some editorial or those sorts of things to really maximise your bang for buck.

Dobbie: Now companies that are looking at the marketing budget as being a sizable part of their overall budget, you’ve talked about ways that you can try and reduce that. But even if you know the option is to either cut out marketing entirely or start to lose staff, it’s a difficult decision isn’t it? But I guess the answer is if you don’t continue marketing, you’re going to lose those staff anyway, because you’re going to lose customers.

Gamble: Exactly, exactly. I think everything that I’ve read during this period of time, a lot of the other experts agree. I just read a HBR article the other day, Harvard Business Review, and that was the main thing was just don’t stop marketing. Really that’s the key thing. You can, because if you do that you’re on a downward spiral.

Dobbie: So are you finding it hard with the customers that you’ve got, that you’re consulting to? Is there an intention from a lot of those companies that they are going to cut back significantly on their marketing activity?

Gamble: I think people are looking for ways to make their marketing more accountable. And I think there are two schools of thought. There are the businesses who see marketing as an expense and there are the businesses who see marketing as an investment. And it’s the one who see it as an investment who are still out there actively marketing and making sure their brand stays out there. But perhaps looking at how, like we said, innovating, how can they innovate their offering to suit the times versus just cutting back and taking the razor gangs to everything.

Dobbie: Well, it’s a lot of common sense, but sometimes knee-jerk reaction keeps common sense from people’s mind at times like this. But thanks very much for your time today Michelle.

Gamble: Thank you Phil, much appreciated.