Hard times mean hard choices. Somebody said that, so it must be true. The current hard-times mean many businesses are making the hard choice to cut through their marcom budgets like a chainsaw plowing through pudding.
It’s called “conventional wisdom.” But even if it is conventional, it might not be wisdom.
There happens to be hard, statistical evidence that says it’s a good idea to keep your marketing budget up, even when the economy’s down. More to the point, for any business that wants to get a jumpstart on the inevitable recovery, bad times might be a good time to boost their budgets for brochures, spec sheets, white papers, email blasts, and advertising. Even without a bailout.
For example, a short article in the April 20 issue of The New Yorker included some interesting arguments to use when you’re standing toe to toe with management as they instruct you to donate more of your budget to the bottom line. Admittedly, The New Yorker is not an authorized source for business advice. And it has its own agenda when it comes to advertising budgets. Come to think of it, so do we. Yet facts are facts, and these days a business ignores them at its peril.
The New Yorker says an economist studied firms that either increased their ad budgets or held them steady during the recession of 1921–22. He found that those companies did “significantly better” at maintaining sales than those that didn’t. But 1921–22 was a long time ago. What about more recent economic black holes?
Looking hard at various fiscal meltdowns, scholars have uncovered what appears to be a pattern. For instance, in the 1981–82 recession, businesses that increased their ad budgets—or avoided cuts—grew “precipitously” over the ensuing three years of turnaround. By contrast, companies that trimmed their budgets saw only modest gains when the economy returned to leaping and bounding status.
And when McKinsey studied corporate spending during the slump of 1990–91, they discovered that firms that came through at the top of their industries had increased their budgets for acquisitions, R&D, and—here’s the key point (in case we haven’t been obvious enough)—advertising. Companies that reduced those budgets ended up at the bottom.
All this scholarly data mining raises an interesting question: Why is maintaining advertising and marketing budgets such a good idea for bad times?
Maybe it’s that “conventional wisdom” thing. In good times, marcom budgets are (relatively) generous. So everyone’s elbowing everyone else in a crowd of marketers, all metaphorically shouting and waving their arms at once. But in bad times, conventional wisdom decides to cut many of those same budgets. So any company that continues to advertise, promote, and otherwise marketing communicate has the field pretty much to itself.
When you’re shouting and waving while standing alone in a field, you do get noticed—the dream of marcom executives everywhere. And for all we know, it’s the reason Apple introduced the iPod during the depths of the dot-com bust of 2001.
Even so, marcom executives don’t always control their marcom budgets. We understand. In a world of tough choices, it’s everyone’s responsibility to make the most of whatever budget is available.
That’s what we do at Harding Marketing. Whatever your budget is, our job is to help you achieve your objectives—on budget, on time, on target, and, if necessary, on the fly.
It seems like a fairly simple goal, but it’s a sometimes difficult task. Yet we’ve been pulling it off for Hewlett-Packard, Symantec, Google, and a host of other companies—high tech and low, big and small, in San Jose and in Grenoble, France—for over 27 years. And we’ll keep on pulling it off throughout this not-so-Great Recession.
If you like to know more about us, please visit our site at hardingmarketing.com.
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