Excerpt from David Poulos article in EZine
Myth #1 - "Our brand is strong enough not to need support for the duration of the downturn."
Fact: Few brands are strong enough to survive without advertising. Brands are like delicate houseplants - they need attention, support, bolstering, and polishing, (the marketing equivalent of nutrients, light and water) - or they will wither and shrivel to a shadow of their former self. This is not a position you want your brand to be in when the growth engine for the economy revs back up.
Myth #2 - "If we cut back on marketing spending, we can use the money for other things internally, and increase the budget when things get better."
Fact: Studies have shown that once that budget gets cut, it takes a herculean effort and a strong internal champion to boost it back to its former levels, and even if it does increase, there are much stronger conditions of ROI attached to its implementation. Once those funds are allocated elsewhere, they tend to stay there - that other department doesn't want to give them up either.
Myth #3 - "Nobody's buying anything, advertising and promotions are a waste of money."
Fact: Many studies conducted have come to the same conclusion: Those that reduce their presence in key service markets are in a far worse position in terms of profitability, market share and market competitive presence when the downturn eases and profitability growth returns than those that maintain their marketing activity levels. Those companies that are so bold as to increase marketing activity stand a great chance of taking market share from their less aggressive competitors and can rule the category if the downturn lasts long enough.
Myth #4 - "We can cut back [on marketing] now, and then ramp up quickly when things get better."
Fact: This strategy has proven disastrous time and again, especially for companies that have inefficiencies inherent in their design, or product delivery channel. That inefficiency won't allow them to "ramp up quickly", since by that very inefficiency they will effectively always be "late" when timing the market - they are not market leaders but laggards, and thus the ramp-up activity gets started late relative to the buying cycle, and their more nimble competitors have already beaten them to the punch.
Myth #5 - "We should examine what's working for us, and cut out everything else."
Fact: Good marketing departments should be doing exactly that on a perpetual basis, not just when times are tough. In addition, there should be metrics built into any campaign so there is a way to "take the pulse" of its success, and mid-course correction is possible to boost effectiveness and increase ROI on a continual basis. Further, in some channels, there is a cumulative effect that blurs perceptions of what's working and what's not - interdependencies exist between channels that are not planned or scheduled but that live in the customer's mind and trigger sales inadvertently. Cutting out what can't be measured accurately hampers this effect, dragging down results with no apparent reason.
Myth #6 - "Marketing spends more money than any other department, they have the most room to cut budget."
Fact: Return is really what counts when it's budget review time. Marketing is one of the few departments that can actually point to contributions they make directly to the bottom line. There is a proven cause-and-effect relationship between sales gross and marketing expenditure for larger and enterprise-size firms. Increased spending in the IT department might yield long-term benefits, but better servers don't often move more product, unless the product is server space. Cutting the marketing budget only reduces the opportunities available to build market share, boost product awareness and memorability in the mind of the consumer, and dampens profitability in the long run.
Myth #7 - "All of our competitors are pulling back advertising and media expenditures to save money, so we should, too."
Fact: This kind of lemming-like sheep thinking can destroy your company! Your Mom knew better than this when you used the excuse "All the other kids are going, why can't I?" Despite being competitors, their financials likely look a bit different from yours, and it's foolish to think that you can mirror their moves and be successful - at best you will be equal! The smart money here is being used to take market share from your more timid competitors, by increasing presence and exposure, and cutting other less-than-mission-critical expenditures for a short period to accomplish it.
Bonus! Myth #8 - "We should downgrade the quality of our marketing materials, use a cheaper creative agency, and mail out less frequently to save money."
Fact: You might save a very small incremental amount on cheaper paper, shorter, smaller brochures, cheaper handouts, smaller tradeshow giveaways - but the damage you're doing to your brand and the resulting poor reflection on the company as a whole does far more damage than can ever be repaired by spending those few dollars later to try and fix it.
Not to mention shaking the confidence of your customers by giving them a visual representation of how poorly your company is performing! "Gee, they must be in trouble, this looks like cheap junk. Maybe I'd better take my business to the other company that's likely to be around to support their products down the line."
Myth #1 - "Our brand is strong enough not to need support for the duration of the downturn."
Fact: Few brands are strong enough to survive without advertising. Brands are like delicate houseplants - they need attention, support, bolstering, and polishing, (the marketing equivalent of nutrients, light and water) - or they will wither and shrivel to a shadow of their former self. This is not a position you want your brand to be in when the growth engine for the economy revs back up.
Myth #2 - "If we cut back on marketing spending, we can use the money for other things internally, and increase the budget when things get better."
Fact: Studies have shown that once that budget gets cut, it takes a herculean effort and a strong internal champion to boost it back to its former levels, and even if it does increase, there are much stronger conditions of ROI attached to its implementation. Once those funds are allocated elsewhere, they tend to stay there - that other department doesn't want to give them up either.
Myth #3 - "Nobody's buying anything, advertising and promotions are a waste of money."
Fact: Many studies conducted have come to the same conclusion: Those that reduce their presence in key service markets are in a far worse position in terms of profitability, market share and market competitive presence when the downturn eases and profitability growth returns than those that maintain their marketing activity levels. Those companies that are so bold as to increase marketing activity stand a great chance of taking market share from their less aggressive competitors and can rule the category if the downturn lasts long enough.
Myth #4 - "We can cut back [on marketing] now, and then ramp up quickly when things get better."
Fact: This strategy has proven disastrous time and again, especially for companies that have inefficiencies inherent in their design, or product delivery channel. That inefficiency won't allow them to "ramp up quickly", since by that very inefficiency they will effectively always be "late" when timing the market - they are not market leaders but laggards, and thus the ramp-up activity gets started late relative to the buying cycle, and their more nimble competitors have already beaten them to the punch.
Myth #5 - "We should examine what's working for us, and cut out everything else."
Fact: Good marketing departments should be doing exactly that on a perpetual basis, not just when times are tough. In addition, there should be metrics built into any campaign so there is a way to "take the pulse" of its success, and mid-course correction is possible to boost effectiveness and increase ROI on a continual basis. Further, in some channels, there is a cumulative effect that blurs perceptions of what's working and what's not - interdependencies exist between channels that are not planned or scheduled but that live in the customer's mind and trigger sales inadvertently. Cutting out what can't be measured accurately hampers this effect, dragging down results with no apparent reason.
Myth #6 - "Marketing spends more money than any other department, they have the most room to cut budget."
Fact: Return is really what counts when it's budget review time. Marketing is one of the few departments that can actually point to contributions they make directly to the bottom line. There is a proven cause-and-effect relationship between sales gross and marketing expenditure for larger and enterprise-size firms. Increased spending in the IT department might yield long-term benefits, but better servers don't often move more product, unless the product is server space. Cutting the marketing budget only reduces the opportunities available to build market share, boost product awareness and memorability in the mind of the consumer, and dampens profitability in the long run.
Myth #7 - "All of our competitors are pulling back advertising and media expenditures to save money, so we should, too."
Fact: This kind of lemming-like sheep thinking can destroy your company! Your Mom knew better than this when you used the excuse "All the other kids are going, why can't I?" Despite being competitors, their financials likely look a bit different from yours, and it's foolish to think that you can mirror their moves and be successful - at best you will be equal! The smart money here is being used to take market share from your more timid competitors, by increasing presence and exposure, and cutting other less-than-mission-critical expenditures for a short period to accomplish it.
Bonus! Myth #8 - "We should downgrade the quality of our marketing materials, use a cheaper creative agency, and mail out less frequently to save money."
Fact: You might save a very small incremental amount on cheaper paper, shorter, smaller brochures, cheaper handouts, smaller tradeshow giveaways - but the damage you're doing to your brand and the resulting poor reflection on the company as a whole does far more damage than can ever be repaired by spending those few dollars later to try and fix it.
Not to mention shaking the confidence of your customers by giving them a visual representation of how poorly your company is performing! "Gee, they must be in trouble, this looks like cheap junk. Maybe I'd better take my business to the other company that's likely to be around to support their products down the line."