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Outlook 2009: Recession forces marketers to be more frugal

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B-to-b marketers heading into 2009 are facing the most difficult business climate in decades, with a global economic crisis putting pressure on costs, access to capital and buyer confidence.

To address these challenges, marketers are tightening their programs and operations with an eye toward realizing efficiencies wherever
possible.

Frugality will be a key theme in 2009, as marketers look at digital technologies from home-grown videos to viral marketing to connect with customers and prospects.

At the same time, they will be carefully examining their core value propositions and marketing messages to make sure they are communicating themes of trust and transparency—important positioning platforms that have emerged from the financial meltdown.

BtoB spoke with marketers, agency executives and industry experts to identify the following top 10 trends
for 2009.

Doing more with less

Stretching every marketing dollar will be the name of the game next year, as companies look to cut costs while marketing budgets shrink.

“[In a recession], we are mindful that spending could dry up, so
we are taking a really close look at our budgets and trying to do more with less,” said Mark Wilson, VP-
corporate marketing at Sybase Inc.

“Anything that is superfluous will get pushed out,” he said, such as single events that are not tied directly into integrated marketing campaigns.

Sybase is also using internal resources to cut marketing costs. This year it converted an unused conference room into a video production studio at a cost of about $15,000, and it is using internal talent rather than hiring actors for online videos, product demos and campaigns.

To cut down on travel costs, the company will use more video conferencing for executive briefings and client meetings next year.

Leveraging social marketing

As President-elect Barack Obama proved during the campaign, there is great power in building online communities and rallying them around a cause.

Now, marketers are trying to emulate his style of social marketing as they look at building and expanding their own networks of online users.

“It’s all about building an experience and deeper relationships with customers,” said Jane Lauterback, exec VP-director of marketing at Doremus, New York.

“How can companies do what Obama did and develop more grassroots efforts? Obama really tapped into the idea of what is best for the community.”

Companies such as Visa Inc. and American Express Co. are finding success building online communities and plan to expand their social marketing efforts next year.

Visa, which launched the Visa Business Network on Facebook this year, has already signed up 20,000 small businesses on the social network.

American Express, which launched the OPEN Forum for small businesses last year, attracts more than 60,000 unique visitors a month.

Both communities help small businesses connect with each other and share strategies for success.

Trust and transparency

In the wake of bankruptcies, bailouts and the stock slide on Wall Street, financial companies have rolled out new ad campaigns with messages focused on trust, confidence and stability.

Heading into 2009, such messages will continue to be important for all brands.

“Trust is a brand,” said Chris Wall, chief creative officer of Ogilvy North America, which serves clients including American Express, Cisco Systems and IBM Corp. “All companies will have to find their trust position.”

Mike Mendenhall, senior VP-CMO of Hewlett-Packard Co., agreed. “Trust will be a very important brand quality going forward. Companies will need to show transparency in their operations.”

Being part of the solution

Showing how they are part of the solution to global problems will also be an important position for b-to-b marketers in 2009.

Last year, Siemens Corp. rolled out a global ad campaign called “Siemens Answers” that shows how the company is providing solutions in health care, industry, energy and the environment. In 2009, Siemens plans to provide more thought-leadership content for its target audience to demonstrate how it is solving their problems.

“It’s important to show that Siemens is part of the solution in solving problems that our customers face,” said CMO Tom Haas.

IBM is also pushing the message that corporations need to be part of the global solution.

“Our political leaders aren’t the only ones who’ve been handed a mandate for change. Leaders of businesses and institutions everywhere confront a unique opportunity to transform the way the world works,” said Sam Palmisano, chairman-CEO of IBM, during a speech last month at the Council on Foreign Relations in New York.

Deeper analytics and database marketing

With increased pressure on budgets and the need to prove ROI, marketers will be even more focused on analytics and database marketing next year.

They will be investing in CRM and lead management systems, as well as hiring more analytics experts to dig through their data and better target prospects and customers.

“We will be increasing interactive, coupled with strong analytics for database marketing and better segmentation,” said Eduardo Conrado, corporate VP-global business and technology marketing at Motorola Inc.

This year, Motorola implemented across its global regions a new CRM system it is using to deliver super-targeted marketing programs. It will continue that rollout next year.

Carla Hendra, co-CEO of Ogilvy North America, said, “Accountability is becoming much more important to the C-suite. Companies will be looking at implementing more database marketing and CRM systems.”

To this end, Ogilvy is hiring more analytics and database experts to work with its clients.

New metrics for changing times

To keep up with shifting priorities and new marketing tactics, marketers are developing metrics not just to evaluate the effectiveness of campaigns but also how their efforts are affecting purchase decisions and trust in the brand.

IBM, for example, is developing metrics that gauge how its customers view the leadership of the company and their trust in the brand.

“We are really focused on share of confidence and share of leadership,” said Sharon Driscoll, VP-worldwide advertising and interactive at IBM Corp., discussing new metrics the company is using.

Marketers are also developing new metrics to measure Web 2.0 activity, such as blog impressions and social network interactions.

“The hardest thing to measure is impressions in the blogosphere space,” said Marcy Shinder, VP-brand marketing and strategy at American Express OPEN.

Video explosion

Taking advantage of a low-cost method of reaching a targeted audience and engaging it with entertaining and useful content, marketers will be expanding their use of online video in ad campaigns, microsites, social media releases, e-mail and newsletters.

Sybase, which began using video in its newsletters this year, has seen a 50% increase in click-through rates, as well as increased viral coverage of its news, Wilson said.

IBM last month launched a new viral video campaign featuring a character dubbed Mr. Fong who is lost in space (see story, page 3). E-mails to software developers include a video of Mr. Fong asking for help in reconnecting with his colleagues. The videos are also available on YouTube, Facebook and other social networking sites.

Marketers are also using more video in banner ads and on microsites, including customer case studies, product demonstrations and user-generated content.

Next year should also bring increased use of video in social media releases that contain links to product demos, testimonials and ads.

Green as a business model

As the environment faces such significant challenges as global warming and dwindling resources, the green effort will move from feel-good marketing messages to become an essential component of companies’ business models (see special report, page 22).

“We think it is hugely important, and it is growing in importance. DuPont is committed to it—it is very consistent with our core values,” said David Bills, CMO of DuPont, which develops products for agriculture, building, manufacturing and other industries.

This year, DuPont partnered with the Discovery Channel to donate building products and expertise to help rebuild the town of Greensburg, Kan., which was wiped out in a tornado last year. The town, which is rebuilding itself as a sustainable community, is featured in a TV documentary called “Greensburg.”

General Electric Co., another leader in the corporate environmental movement, is already exceeding its goal to generate more revenue from eco-friendly products in wind power, solar energy, transportation and clean coal, as well as reduce its own carbon footprint.

Other b-to-b marketers including BP, Dow Chemical Co. and Siemens are integrating green efforts into their product development and marketing platforms.

Increased global spending

In an effort to drive additional revenue and tap into emerging markets, b-to-b marketers expect to increase their global marketing efforts in 2009.

GE is one such company planning to increase its global marketing budget next year, said Beth Comstock, senior VP-CMO. Currently, about half of GE’s revenue comes from outside the U.S. The company is placing emphasis on emerging markets in China, India and EMEA (Europe, the Middle East and Africa). “This will continue to grow as we increase our global spending,” Comstock said.

Motorola is also looking at increasing its global spending next year. “With our international marketing, we will look at which markets are up and which markets are down, and shift our resources accordingly,” said Motorola’s Conrado.

More focused events

Some marketers say they will cut back on large horizontal events next year in favor of targeted, face-to-face events with key customers and prospects.

Oracle Corp., for example, held more than 7,000 events this year and plans to increase that number next year, said Dan Goldstein, senior director of marketing at Oracle. “We are getting a good ROI on the types of live, in-person events we are doing,” he said.

Oracle, which conducts focused events with senior executives and IT buyers, has seen its average deal size increase 150% this year over last year, and events have been linked to more than half of total deals won this year.

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