Growing Income From Home

The last thing you should sacrifice to the recession

The Skinny on Marketing in a Recession

By Bob Bly

Whenever the country is in a recession, marketing trade publications run articles extolling the importance of continuing to advertise. Since these articles are usually contributed by ad agencies and marketing consultants, one could argue that they are self-serving.

As Warren Buffett says, "Don't ask the barber if you need a haircut."

Marketing professionals make money only when companies buy their services. But do they REALLY believe that spending money on advertising in a recession is smart business? Or are they pushing clients to keep spending so they themselves won't starve?

During a recession, when money is tight, should companies ramp up their marketing… keep it steady… cut back… or stop altogether?

Following the 1981-1982 recession, the McGraw-Hill Research Laboratory of Advertising Performance analyzed the performance of some 600 industrial companies during the downturn. Of course, we must keep in mind that McGraw-Hill, as a major publisher of trade journals, depends on ad revenues to maintain profitability. That being said, they found that "business-to-business firms that maintained or increased their marketing expenditures during the 1981-1982 recession averaged significantly higher sales growth both during the recession and for the following 3 years than those which eliminated or decreased marketing."

In a different study, Management Review asked American Management Association (AMA) member firms about their spending during the 1990-1991 recession. The data showed that most firms that increased their marketing budgets enjoyed gains in market share.

One of my readers, MT, owns a software company. In response to the recession, he has cut his budget for Google AdWords campaigns in half.

How did he determine what to trim?

Before the recession hit, MT ran 10 Google PPC ad campaigns – all profitable. "When the economy turned south, six of those PPC campaigns, those targeted mainly at fence-sitters who don't buy any longer, began to lose money," said MT. So he wisely cut those unprofitable PPC campaigns – and kept running the four that were moneymakers.

According to an article in Internet Retailer, nearly four out of five households earning $100,000 a year or more said they are cutting back their spending. And when consumers cut back on spending, your business can take a real hit – especially if you sell a product that's "nice to have" vs. one that customers absolutely must have.

So what can you do to maintain healthy sales during a recession that is likely to continue for some time?

The first thing big corporations cut in tough times is marketing. That's really stupid. And, yes, I know that, as a copywriter, I sound self-serving when I say this. But marketing, when done right, makes money, brings in customers, and generates sales.

During a recession, your biggest problem is making sales and maintaining revenues – exactly what marketing is designed to accomplish. So stopping all marketing really makes no sense. What DOES make sense is MT's approach:

1. Precisely measure the ROI (return on investment) from all your marketing campaigns.

2. Cut the ones that lose money.

3. Keep the ones that make money.

John Wanamaker, a famous retailer in his day, once said, "Half my advertising is wasted, but I don't know which half." But today, with direct-response measurement and Web analytics, we DO know which half is wasted. So we can fix or eliminate the wasted ads, and generate a positive ROI by running the ones that do work.

I am taking a survey on my website (www.bly.com) on how the recession has affected my visitors. So far, 38 percent of survey participants say their sales are flat, while 25 percent report increased sales and 37 percent have seen sales fall.

Eight out of 10 express some degree of worry about the effect the recession will have on their business and their sales. In response, 32 percent have increased their marketing budgets and 24 percent are spending less on marketing. Yet most are holding firm on pricing. More than 8 out of 10 say they have not lowered their prices to stimulate sales.

When it comes to predicting economic recovery, my survey participants are slightly pessimistic. Just over 57 percent believe the recession will end this year or (more likely) next year. Almost 43 percent say the country won't recover from the recession until 2011 or later.

To find out more about marketing and selling in a recession, click here now.

[Ed. Note: Bob Bly is a freelance copywriter and the author of more than 70 books. To subscribe to his free e-zine, The Direct Response Letter, and claim your free gift worth $116, click here now.

It might surprise you to know that many marketing channels cost nothing or next to nothing to explore. If you know what they are, and the best ways to use them, you can attract paying customers no matter what the economy is doing. Join Early to Rise and world-class marketing genius Bob Bly in the remarkable new program we've put together solely to solve today's most pressing business problem: How to make money during the recession. Get all the details here.]

This article appears courtesy of Early To Rise, a free newsletter dedicated to making money, improving health and secrets to success. For a complimentary subscription, visit http://www.earlytorise.com.