It is generally accepted that the first thing a business cuts when a recession hits is its advertising and marketing budget. But research suggests that impulse may be detrimental to the ongoing well-being of businesses.
A report from Ad-ology Research entitled Advertising's Impact in a Soft Economy said that almost half of the adults surveyed believe lack of advertising by a retailer, bank or auto dealership is a telltale sign of business distress.
On the flip side of that coin, about half of survey respondents perceive businesses that continue to advertise and market their services as being competitive and strong despite a bad economy.
"If you show an outward reduction in your public activities, the perception will certainly be by the viewer or the audience, that you are cutting back, and they will wonder why," said Todd Ablowitz, President of payments industry consultancy Double Diamond Group LLC.
Furthermore, as reported in USA Today, John Busbice, Ad Analyst at IMS Consulting Ltd., said a recent study showed that for every dollar pharmaceutical companies spend on advertising, they reap $1.40 in profit. This is an indication that advertising in a recession can be fundamental to success.
Ablowitz recommends that companies struggling financially scrutinize with "a laser focus" all aspects of their operations. "That doesn't mean you eliminate advertising or marketing," he said. "It means you make very clear decisions about the parts of your business that have the most chance for success and invest in those and be aggressive in cutting out expenses with less return."
Ablowitz pointed out that for businesses that aren't over leveraged but may have seen a drop in revenue, the recession presents an opportunity to take advantage of their relative stability.
"If your competitors are pulling back, find those weak spots and go there with your marketing," Ablowitz said. "If your competitors are changing gears, make sure to pick up where they left off.
If they pulled out an ad that they were running in a good premium spot, maybe you should go and jump into that spot. ... I've seen examples of competitors doing that. It can be very effective."
According to independent payments industry consultant Gregory Holmes, successful marketing strategies during recessions can be accomplished on a tight budget.
A strategy built on leveraging online tools, such as a combination of keyword searching and search engine optimization, is one cost-effective approach.
Maintaining consistent and steady communication with potential customers over time is vital, Holmes noted. He gave The Green Sheet as an example.
It may take years of reading the trade publication before a company decides to place an ad or buy a sponsorship, but "there will be a point when most people in payments, particularly in the ISO space, will make the effort," he said.
In addition, brand identification and trust can be increased when businesses extend their selling strategies to include education; beyond just selling products and services, businesses can publish white papers, present tutorials or host webinars that inform customers about important industry issues.
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