Changes to Marketing Spending and Strategy Coming in 2009
How the current economy is affecting marketing budgets and the customer experience are hot topics right now. So last week I asked readers and LinkedIn members to respond to a brief survey on potential changes to their 2009 marketing budget and strategy. Some results surprised me (I thought that "decreasing our marketing budget" would get the lion's share of votes, but it didn't); while others were expected (a continued shift toward social media marketing).
Nearly 60 people responded to the survey; a few sent comments, as well. I found the comments to be telling.
For example, Tiffany Bentley, national marketing coordinator at Triad Manufacturing, said "I think it would be crazy to cut back marketing dollars in a time like this. This is the time when you need to be top-of-mind more than ever before to keep ahead of competitors who are feeling the crunch [and] cutting back their advertising and becoming less and less visible to their market. These are the times where marketers can really do their jobs. If you get creative and focus on frugality in other areas, spread your marketing dollars out wisely but continue spending (relatively) what you have been spending, and negotiate, negotiate, negotiate with ad rates, your customers will remember you, new customers will find out who you are, and you will come out smelling like a rose and looking like the strongest lion in the pack (even if you are struggling just as much as the next guys)."
While Andy Lorin, senior marketing analyst for Bonasource, said, "Whatever we may think about marketing and its grandiose goals, it's still part of a company's P&L. When the economy is in trouble, it hits the total budget, including the marketing one.... The major issue here is the level of future spending. Mainly, marketing's job is to make an intelligent bridge to any potential spends in waiting. While they're on hold, it's hard to expect any significant marketing surge. Simply, because it'd be an empty shot to nowhere. Once the economy fundamentals have come back to normal along with spending amounts, we may see marketing budgets bouncing back and up."
The survey responses also spoke volumes. About one third of respondents said their 2009 marketing budget would increase, another nearly one third said it would decrease, and close to 40 percent said it would remain unchanged.
Company size played an unexpected role. Nearly 40 percent of small business plan to increase their marketing budget in 2009, but only a quarter of midsize company and 15 percent of large enterprises plan to do so. About a third each of small and midsize companies expects to decrease their 2009 marketing budget, while nearly 40 percent of large enterprises will be tightening their purse strings. Additionally, a quarter of respondents said their marketing budget would increase as a percentage of their organization's revenue, while 34 percent said it would decrease, and 36 percent said it would stay the same. Five percent said this didn't apply to them.
When asked whether they're planning to reallocate marketing resources in 2009, responses were in line with what one might expect. The top three areas flagged for increased spending are social media (69 percent of respondents), email (68 percent), and search (50 percent). The top three in line for cutbacks are print (44 percent), direct mail (33 percent), and trade shows/conferences (28 percent).
Customer engagement is the number one marketing goal for 2009, with nearly two thirds of respondents citing it as their primary objective. Also cited as a high priority for 2009 are lead generation (41 percent of respondents), awareness (39 percent), and branding (35 percent). Based on these goals, I'm not surprised that most marketing budgets are holding steady or increasing.
"Should we really change?" asked Rene Lisi, a CRM and customer experience consultant, in reference to whether marketers will change their budgets or strategy for 2009. "We must avoid focusing on short-term earnings (increased fees in financial services, etc.). We should focus on building trust and service quality."
Click here to view the full survey results.
Related Entries
- Guest Blogger Joseph Jaffe: It's Better to Be S.A.F.E. Than Sorry
- Guest Blogger Steve McAbee: The Social Media Conversation
- Think About It
Hi Ginger,
your interesting article let me know your survey, conducted on Linkedin, and the importance of marketing digital strategy,
Claudio Iacovelli
http://marketing-intelligence.blogspot.com
One reader emailed me about 2009 marketing priorities and said,
"In 2009, we will focus more on our top accounts, accelerating the top priority projects with them and expanding the whole set of issues on the table. We see here some reserves for boosting marketing efficiency that is probably the #1 question right now. Shifting the emphasis to our core clients while streamlining the rest will give ROI the upper hand."
I recommend focusing on core values and continue to build strong, viable relationships. Ask challenging questions and really listen to the customer's issues and their needs. I believe this fosters genuineness and trust for today and for tomorrow.
During down economic times, it may be common for business development outfits in B2B environments to agonize over pipelines and forecasts and hunt for places to curb spending, like T&E. But down economic times are a perfect opportunity to have meaningful discussions with your clients. Book a meeting, set a meeting strategy, walk in with a blank sheet of paper, and ask pointed questions to draw out client needs that will fit well with your service offerings. Standing by clients when the bears are in town means even more revenue when the bulls return.
Hi Ginger
Great discussion.
I support the suggestion made by several of the respondents that better customer intelligence is part of the larger better marketing picture.
Having said that, I co-chaired the IIR Customer Segmentation & Intelligence conference in Monaco (co-sponsored by Peppers & Rogers) last week, and heard a lot of new thinking about customer intelligence from the delegates there.
The key message was that traditional customer analytics - done solely for the short-term advantage of the company - is probably not going to cut it over the next few years. Companies are going to have to expand its scope to include the value delivered to customers too. Maybe even going as far as co-creating customer strategy with customers too. Quite a change for many marketers used to only looking for better ways to move their current products.
I blogged more extensively about 'New Thinking about Customer Inteligence' over at the CustomerThink site.
Graham Hill
Further Reading:
http://www.customerthink.com/blog/new_thinking_about_customer_intelligence
BJ,
Great point. Starbuck's hit drink Vivanno is one example of a successful product that originally came from a customer suggestion.
I second Becky's comments. One of the key ways that companies can continue to provide innovative products and services is simply by asking their customers for ideas and acting on them. It results in products and services customers will purchase and like Becky said, builds better relationships with them as well.
It was really a nice try to sample marketing budgets for 2009. While obviously carrying somewhat of a bias, this 30-40-30 layout [of responses to whether 2009 marketing budgets would increase, stay the same or decrease] quite vividly captures the moment we're living in right now. The majority of the players are accommodating somehow to the negative market pace while some are jumping into to capitalize on it. By the way, both are quite valid strategies with different risks and chances to be successful. Those with the upper hand on budgeting sure map the curvy path with only a few of them probably catching the target. And it seems fair: some portion of good risk should be rewarded.
I work as a consultant, so will answer these questions from the perspective of a current client -- a large financial services organisation
1. They are improving their ’09 marketing by actively and genuinely going to their customers, through a branded online community using social media, to ask for advice on the structure of an internal start up, reinventing themselves with their customers’ help. Within actuarial limits, they will co-create a new organisation and products with their most engaged customers. Constructive cannibalism. To a large extent their marketing will then be to ask for customer help in getting the word out.
2. To provide an apple-to-apple comparisons of ROI, they will compare the costs of achieving current ATL targets in the existing business – impressions, recall, sales, income and LTV with this new channel. Costs with the new approach are small compared to ATL campaign costs, so effectiveness will have to be high for this initiative to produce similar absolute results. But early signs are good.
In response to my question on plans to improve marketing and marketing ROI in 2009, the marketing manager at a software integration company said:
"I intend to do more “testing,” and then not be afraid to alter the approach where necessary. We have done a very poor job of tracking ROI. In 2009, I vow to make the additional effort to track all expenses and cost. Then, we will try to determine the new business from each activity. Sounds pretty basic, but it hasn’t been done here in the past."
The director of membership for two industry associations said that they plan to improve marketing and marketing ROI in 2009 "through CRM and segmentation. We've hired a segment manager, invested in a social networking and CRM technologies. We are continuously testing messages, design, packaging and a new pricing strategy to increase our overall impact and effectiveness."
And, the head of a consulting firm plans to use "more focused and targeted e mail promotions," as well as "1-to-1 communications to targeted customers."
How do you plan to improve your marketing in 2009?
By focusing only on things that work. Too often I have seen money wasted on ideas that should never have got past first post. It also means spending more time analysing the stats before, during and after spending.
I have also seen money wasted (and sales lost forever) after the buzz of launch has died down, with failures in systems causing leaks in the sales process. Constant daily monitoring of response, traffic and sales, and effective warning systems to spot problems early, will be a pre-requisite to everything we do in 2009.
How do you plan to ensure that your marketing ROI improves in 2009?
1. Stop the waste.
2. Ask questions, challenge the idea harder and don’t be afraid to say no.
3. Demand better quality work from suppliers.
Basically marketing needs to become more effective, and that usually means doing simpler stuff, smarter, and with a very clear understanding of how the customer will respond and how the customer will buy. It’s common sense really!
As I noted earlier, based on everyone's comments I asked the survey respondents two additional questions:
1. How do you plan to improve your marketing in 2009?
2. How do you plan to ensure that your marketing ROI improves in 2009?
I'll note any responses as they come in, beginning with this one from the VP of marketing for a professional services organization:
"Our focus is on building deeper more relevant relationships with our [customers]. We are trying to understand what they value and what they need and then creating content and interactions that strengthens our value to them. We need to mean something unique to our customers – and that differentiation will set the foundation for our future. To create that unique value, we plan to focus on micro-interactions both online and face to face.
To make sure our ROI improves for 2009, the critical piece will be making sure that all of the stakeholders agree on how we define success. Things we need to define with crystal clarity include: who are we trying to reach, what do we want them to do, and how will we know if they are doing it.
Don,
So true! Customer data--and the ability to extract actionable insight from it--is invaluable. 1to1 just conducted a study with SAS and Jubelirer on how extensively customer experience capabilities deliver business impact, and much of it touches on customer insight. I'll be writing about the findings later this week, but in the meantime, the study is available at http://www.1to1media.com/links/CEMM.html
In my own discussions with senior marketing and sales executives around the world (and remember, the downturn we're facing is global), the consensus seems to be that bad economic times require not necessarily less spending but smarter spending. Spending that gets results more reliably.
Folks I talk to say they are mostly thinking about how to get more bang for each buck, rather than simply taking a hatchet to the budget.
Of course, it is one heckuva lot easier to improve the efficiency of your marketing budget IF you have reasonably decent customer data and analytics.
Gary,
One thing we always emphasize at 1to1 is 'profitable' customer relationships where there's a value exchange. Considering that premise, it seems that ensuring the quality of the marketing spend should be a given no matter what the economic conditions--but an uncertain economy is certainly a good time to reexamine that spend to ensure that the ROMI quality is still high and to determine whether there are new opportunities to improve it.
I am really surprised with the results of the survey. It seems to me that in tough economic times the quality of the marketing spend is more important than the quantity. As a CEO of a number of mid sized ($100 million+) companies I have been through three economic down turns and in every case the marketing budgets that survived the cuts were the ones that had known quantifiable results. The return on marketing investment ruled out over more speculative and less quantifiable investments. The over-all spending was down but we put more dollars into those programs we knew would generate clear results.
Becky, Graham, Candice,
Thanks for your comments. It would be interesting to follow up with the survey respondents to see what their plans are to improve their marketing. So... I think I will. I'll let you know what I find out.
We noticed a lot of companies are still using traditional product-focused strategies, it is high time they change that focus onto the customer. For those who already have a customer strategy, I'd suggest they get more competent at it than trying to do more with the economy nose-diving. Seller's expertise is one of the key antecedents for winning customer commitment, trust and relationship satisfaction.
Hi Ginger
Great survey. But very troubling results.
The marketers surveyed do not seem to realise that the world around them is going to systemically change. Probably for the worse over the next 2-3 years. That means tighter budgets, tighter markets and much tighter profit margins.
The responses you quoted and the general tenor of the survey seems to be that marketers can just continue to do more or less what they have always done. And sit and wait until the recession has gone away before returning to business as usual. But business as usual is probably not coming back this time.
These myopic marketers are very much mistaken. Marketers must ply their trade much better than they have to date. By all means spend more on marketing, but do it more effectively, more accountably, more efficiently than today.
The world needs BETTER marketing not just more of the same. But the survey makes me wonder whether the current generation of marketers is really up to it.
Graham Hill
Independent CRM Consultant
Interim CRM Manager
Those companies that are more likely to successfully weather the storm are those that hunker down and focus on strengthening relationships with existing customers. Our company is pushing customer focus to the forefront right now!