Is a recession on the horizon? Whether one is or not, it would be wise for CMOs to be prepared long in advance of when their organizations experience a real decline in revenues or revenue growth rates.
Historically, the smartest marketers where the ones who took advantage of a recession and increased their share of voice (a measure of ad spending) either by temporarily increasing or at least maintaining ad spending. This strategy was confirmed by the famous PIMS (Profit Impact of Marketing Strategy) studies in the 1970 and 1980s. In 2001, a deep but short recession negatively impacted manufacturing and our largest B2B client. We had already discerned that their major competitors, who were also share of voice leaders, would be cutting their ad spending in the second half of the year. Citing this information and the PIMs study, we recommended that our client maintain their ad spending which would give them temporary leadership in share of voice and send a message to their national distribution network that they were behind them. To sweeten this recommendation, we volunteered to take a 90-day “agency fee holiday” while increasing the intensity of our marketing services at the same time. The outcome was fantastic as the client took advantage of the timing to reposition their business which resulted in leadership in a profitable and growing line of business. Our strategic marketing agency also benefited from this time as we helped our client grow new business lines over the next nine years. But would this strategy work today? With the possible exception of the largest global consumer brands, I don’t think so.
Total ad spend is much less relevant today than it was five or ten years ago because of the dramatic shift to digital content marketing. According to E-Marketer, digital advertising spending will surpass television advertising spending in 2017. More importantly, 64 percent of current digital advertising is driven by mobile marketing which is growing even more rapidly. Marketers’ goals have also changed. It used to be that achieving awareness gains was most important. Today, marketers care more about achieving gains in engagement. Therefore, marketers need to provide access to the content that consumers need the moment they need it in order to move them along the marketing-conversion-relationship (MCR) funnel.
So how can you be ready for marketing in a recession? By ensuring you are mastering and applying the same MCR strategies in a growing economy.
These principles apply to both B2C and B2B marketing. Most companies have general strategies mapped out to address these areas, but they are often informal and fragmented. It is best to have a written, integrated MCR Master Plan that is developed by the team responsible and accountable for implementation, monitoring and performance improvement.
May 31, 2016
Written by Tom Sullivan
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