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Social Media: Made for a Recession

  |  February 13, 2008   |  Comments

Tougher times favor highly-targeted media that can perform adequately at lower overall spend levels.

A post last week that raised the question of e-mail-based marketing's ability to stand up in a recession intrigued me. "What, if anything, is recession-proof with regard to marketing?" Recession implies that marketers and consumers don't have as much to spend beyond the staples. With nothing to spend, you can market all you want and hope potential customers add you to their when-sunny-skies-return list.

Keep in mind: during a recession, or any other time for that matter, marketers must get the most for their marketing dollar. A recession adds heightened sensitivity for absolute cost, on both your part and your customers' part.

Looked at that way, the recession question isn't, "What medium is recession-proof?" (I still contend there isn't one). Instead, the question is, "When options are ranked in terms of ROI (define) and then re-ranked in terms of pure cost, which mediums would do the best on both lists?"

Here's the logic: no one wants to throw money at a medium with a sub-par ROI, unless that medium provides a required "fill-in" in terms of its reach for a specific audience segment.

For example, TV has an ROI driven in large part by the upfront market that sets the costs for a big chunk of the planned spend. Marketers who step up to value-driven upfront commitments often supplement them with additional spot buys, even though the unit cost is higher. This capitalizes on a specific "right now" opportunity or market development unforeseen at the time of the original commitment.

The ROI on the spot campaigns may be a bit lower (not always), but if it contributes an incremental gain or provides tactical coverage, then it's worth it. As a media planner you can, therefore, make the case for the use of varying ROI media: it's not as simple as just choosing the highest ROI media and putting your spend there.

However, a recession limits the options on another front: overall cost. Let's say your media budget is $10 million and you allocate $7 million of that to television to create the level of awareness you reason you need. Then your boss orders a 50 percent budget cut, forcing you to rethink the amount you'll spend on any given medium and the media mix to use. Then, suppose your best media planning models suggest that television won't deliver the oomph you need if you spend less than $5 million on that medium.

Now what? This is recession's impact, and this makes the case for that second list. Simply put, not only do you need to know what works best, you need to know what you can afford at all.

If you manage a modest budget, you understand this scenario. A recession actually provides an opportunity for smaller-brand managers who have better "street-smarts" than their well-heeled big-brand colleagues. A recession favors e-mail and other highly-targeted media that can perform adequately at lower overall spend levels and don't need to achieve critical mass as it does in broadcast buys.

Social media fits this same mold as e-mail marketing. It operates at a personal level without a direct media cost.

What about consumers? Don't they factor into the recession question? Well, yes, they do. As always, they seek value. Charlene Li has an excellent post at Social Media Today on the use of social media during a recession. She notes that measurability, overall cost, and the fact that social media operates in the consideration cycle are all predictors of its success as a marketing toolbox component during tougher times.

Viewed from a consumer's perspective, a recession means that both value and absolute cost take on a new sense of importance. As Charlene notes, social media can be very effective in this situation. By relying on the collective, an individual consumer can often make a better choice.

During a trip to a computer retailer the other day, I noticed two competing back-up drives on sale. I'm in the market for one, so I asked the sales person about them. Each is pretty good, he said, adding that the store sold a lot of each.

I spotted a nearby Internet-connected PC, opened the browser and looked up the online reviews. One had a lot of "five out of five" ratings (loved it, easy to install, works great) and a good number of "one out of five" ratings (don't buy it, lacks a fan, overheats if you leave it on). The other was a similar mix of "five out of five" and a few "one out of five," with comments like "great value" and "works well, but it should come with its own back-up software."

Based on the reviews, I made my choice. We use Norton backup utilities, so the lack of software was less of an issue than a drive prone to overheating if left on continuously. Both were about the same cost and about $50 cheaper than the next lowest-cost alternative. While absolute cost and relative value were both factors, social media played the deciding role in the actual purchase.

As a marketer, think about the role that social media can play, especially if working with a limited budget. Social media works, is measurable, and can be undertaken on a budget. It's a great tool for your marketing toolbox. A recession is as good a time as any to get it out.


Dave Evans

Dave is the VP of social strategy at Lithium. Based in Austin, Dave is also the author of best-selling "Social Media Marketing: An Hour a Day," as well as "Social Media Marketing: The Next Generation of Business Engagement." Dave is a regular columnist for ClickZ, a frequent keynoter, and leads social technology and measurement workshops with the American Marketing Association as well as Social Media Executive Seminars, a C-level business training provider.

Dave has worked in social technology consulting and development around the world: with India's Publicis|2020media and its clients including the Bengaluru International Airport, Intel, Dell, United Brands, and Pepsico and with Austin's FG SQUARED and GSD&M| IdeaCity and clients including PGi, Southwest Airlines, AARP, Wal-Mart, and the PGA TOUR. Dave serves on the advisory boards for social technology startups including Palo Alto-based Friend2Friend and Mountain View-based Netbase and iGoals.

Prior, Dave was a co-founder of social customer care technology provider Social Dynamx, a product manager with Progressive Insurance, and a systems analyst with NASA| Jet Propulsion Labs. Dave co-founded Digital Voodoo, a web technology consultancy, in 1994. Dave holds a BS in physics and mathematics from the State University of New York/ Brockport and has served on the Advisory Board for ad:tech and the Measurement and Metrics Council with WOMMA.

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