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Marketing budgets in flux

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In a downturn, perhaps the most important metric of all is the bottom line, or, in other words, answers to the questions: “What are you spending money on and are these investments paying off?” To that end, BtoB recently spoke to analysts and b-to-b marketers to get a feel for how marketing spending and tactics are evolving in the economic recession. While marketing budgets are down—as are most departmental budgets these days—spending in some areas for some marketers is actually up. On the other side of the coin, many marketers are using the downturn as an opportunity to reassess, often reducing spending on traditional but less-than-productive activities. Recent data from Forrester Research indicates that 50% of the 114 interactive marketers using social media that it surveyed plan to increase social technology spending this year, while only 5% plan to decrease spending. Granted, that's spending on a relatively small base, given that social technologies are new and relatively cheap; but “try to name another marketing investment that's anywhere near this strong in recessionary times,” said Forrester analyst Josh Bernoff. Likewise, in IDC's marketing barometer study, which looked at b-to-b marketing trends for the first quarter of 2009, overall spending was down about 10% on average, but some areas were holding steady. In particular, spending on marketing automation seems stable, at least for now, said Michael Gerard, analyst and leader of IDC's CMO Advisory Practice. “Marketing operations is an area that's not taking a big hit like you might expect,” Gerard said. “It's a good strategic decision that marketers are making versus past downturns.” IDC's research also found some areas of marketing automation remain a priority even today. These include campaign management and nurturing, lead management, and database marketing. Behind that, marketing automation is increasingly a “more sophisticated approach to demand generation than, "Hey, let's generate some leads,' “ Gerard said. “There's more of a focus on quality content generation and getting leads to sales folks in an expedient manner. That's a big difference from in the past.” Eastman Kodak Co., for instance, is “moving full steam ahead” with an ongoing deployment of a marketing resource management platform, said Kodak CMO Jeffrey Hayzlett. “Those systems help me gain more efficiencies.” At the same time, Kodak's marketing team is very focused on negotiating down fees with those vendor partners, another way to take advantage of the down economy, Hayzlett said. Overall, b-to-b marketers say they are being cautious with budgets, but can't afford to stall key activities. “As most companies are doing, we are taking a conservative approach, going back to the basics that are most important,” said Kim Woodward, VP-corporate marketing at technology vendor Citrix Systems. The twist, Woodward said, is that even when falling back to the basics, marketers must watch their spending closely. Specifically, Citrix is placing a big focus in the downturn on public relations and maintaining a high profile for the Citrix name and products. But instead of conducting in-person press tours and customer visits, PR activity is being driven by virtual and online tactics, Woodward said. Also Citrix is strongly focused on maintaining strong lead-generation activities. “Customers eventually will need to start spending again,” Woodward said, adding that low-cost customer touch tactics included investing in the Citrix Web site, working social media strategies and keeping in contact with current customers via newsletters and customer council events. “Even if it isn't in the short term, over the next few quarters, it is important to get our name out there and keep up with sales opportunities,” Woodward said. “It's more important than ever in a down economy because, when [current] customers start buying again, there's a good chance they are going to start buying with you.” The flip side of focusing spending on areas with strong ROI is taking a look at areas—often areas of traditional marketing spending—and making some strategic cuts. “We continue to tell our clients to leverage this as an opportunity to eliminate entrenched silos of cost,” said IDC's Gerard, adding, “things such as big events or significant traditional [print or broadcast] advertising—it's time to rethink those areas.” “A down economy is a good time to take a scalpel to programs, and we've certainly done that,” said Citrix's Woodward. “The important point is that we now use data and ROI metrics to guide us to things that work or don't work. It's not based on emotion but on data.” A downturn can also be about opportunity, Woodward said, adding that exploiting rivals' weaknesses in tough times is a strong tactic these days as well. “Marketers need to be thinking opportunistically right now,” she sad. “Some competitors are retrenching; now is the time to think about taking advantage of that.” M
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