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Recession Marketing: Avoid the Fear Factor

  |  February 22, 2008   |  Comments

How businesses can benefit from advertising and marketing during a downturn.

Robyn Sachs, president of marketing communications firm RMR & Associates, weathered recessions in 1990-91, then again in 2001. She's prepared to tough out the latest economic downturn.

"Each dollar spent in marketing communications online, in print, whatever, will speak louder, go further. You have more negotiating power with publishers," she says, explaining what she tells clients. "If you want to look at the silver lining with a recession, it's a golden opportunity to have your dollars work harder and better."

While a recession hasn't been officially declared, many signs point to one.

Sachs says her Rockville, MD, firm has been able to convince clients, mostly B2B (define) companies, to continue investing in marketing and advertising. How so? She says she shares data with them that show how businesses benefit from marketing during a downturn. For instance, a 1990 Center for Research and Development study found aggressive advertisers obtained 4.5 times the market share gain of competitors who didn't jack up spending during a recession.

During the 2001 recession, for instance, companies such as Dell and Wal-Mart saw the downturn as an opportunity to invest more in marketing than weaker rivals. Seventy years earlier, during the Great Depression, Camel cigarettes and Chevrolet were known for their aggressive marketing and grabbing market share from rivals.

In today's climate, Sachs says businesses allocate money to campaigns that can be measured, especially online. Sachs' clients are particularly interested in lead generation, SEO (define), and pay for click. Direct marketing works, she adds, when a company knows its target market.

"They [clients] are less interested in, don't care as much for, image advertising, branding campaigns," she says. "The number-one request is 'Give me qualified leads.'"

Consider these two RMR clients: A physician's practice that helps people with weight loss, is shifting dollars to lead generation. Meanwhile, a chain of carpeting and tile stores is targeting radio and paid and organic search and will continue running "Washington Post" ad inserts, according to Sachs.

At Miami-based interactive agency BGT Partners, clients' budgets are shifting from branding programs, or "indirect revenue," to online programs, where sales revenue and orders can be tracked, says David Clarke, managing partner. Those so-called direct revenue programs include PPC (define) and affiliate marketing. "Investment is occurring in low-risk media campaigns where the results can be precisely estimated," he writes in observations shared with ClickZ.

In a downturn, Jeff Lanctot, a SVP at interactive agency Avenue A|Razorfish, contends that even SEM (define) wouldn't be immune to cuts. While search marketing is considered more resistant to cuts than other advertising because it's performance-based, Lactot says consumers would be less likely to go online during a recession to search for and research potential purchases.

Where should a marketer begin? ClickZ Experts have offered these suggestions, and more.

Come to Your Customer's Aid

Web marketing consultancy ZAAZ cofounder Shane Atchison recommends companies engage in marketing outreach, helping customers get the most value from their online experience. Commerce sites, for instance, should offer discounts or build loyalty programs.

Be Flexible

Marketers should be able to quickly adjust marketing strategies. In SEM, Didit executive chairman Kevin Lee recommends marketers be agile and invest in new keyword inventory in response to searchers' online behavior or search intent.

Reach Premium Audiences at Lower Costs

Marketers can turn to the Internet to reach traditional broadcast audiences. By using behavioral targeting, interactive agency NetPlus Marketing chief executive Robin Neifield can get ads in front of Web-savvy people who view primetime television shows online -- at a fraction of the cost of TV advertising.

Not all businesses should proactively market during a recession, warns Arvind Rangaswamy, a marketing professor at Penn State's Smeal College of Business and coauthor of the 2005 study, "Turning Adversity Into Advantage: Does Proactive Marketing During a Recession Pay Off?"

The study finds firms that typically market during a recession place a strategic emphasis on marketing, embody an entrepreneurial culture, and possess slack resources that are easily redeployed. Those that succeed have well-recognized brands, differentiated products, targeted communications, and good support and service.

While that study examined traditional advertising and marketing, Rangaswamy suspects its findings would apply to online. "We'd assume the same kind of logic would carry over," he says.

What's key, RMR's Sachs insists, is companies avoid getting swept up in the FUD factor: fear, uncertainty, and doubt. "A lot of what happens during a recession is emotion. Counter emotion with factual data, such as the average recession only last 11 months."

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Anna Maria Virzi

Anna Maria Virzi, ClickZ's executive editor from 2007 until 2012, covered Internet business and technology since 1996. She was on the launch team for Ziff Davis Media's Baseline and also worked at Forbes.com, Web Week, Internet World, and the Connecticut Post.

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