Resist panic-driven cutbacks, avoid long-term brand harm

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"Have you cut your marketing budget since January? Can I see a show of hands?" Over the past couple of months, this has joined my short list of routine questions to ask audiences at speaking events.

People will raise their hands, secretly glancing around the room to see how their counterparts have answered. They seem relieved to see they are not in the minority. Misery loves company, after all. There's no doubt that today's marketing budgets are contracting.

But is this wise? I'm convinced it isn't, and that any short-term savings are far outweighed by the loss of brand awareness by current and potential customers.

A body of empirical research indicates the most successful companies maximize their long-term shareholder value by maintaining their advertising investments, outpacing competitors who cut back. Besides, building market share during hard times may be less expensive than when the economy is strong. Look at IBM's recent decision to increase its marketing budget by about 10% ("IBM boosts ad spending to gain share," March 19).

A key champion of this school of thought is Professor Patrick Barwise of the London Business School and editor of "Advertising in a Recession," a collection of research and case histories. Barwise compellingly argues against panic reductions in budgets in response to short-term economic downturns. The better course, he says, is to build these budgets with long-term objectives, tied to a company-wide strategy. Unless this wider strategy changes, leave the marketing budget intact.

But suppose you can't convince a cost-cutting CFO of the widsom of this approach. What next?

Here are a few tangible things you can do that don't cost much:

• Take your counterparts in sales, operations, R&D and finance out to lunch. Ask about their short- and long-term goals. These meetings should suggest projects for the marketing department.

• Audit your current spending in print, broadcast, events and online. Do you have mechanisms to gauge the success of these efforts? If not, you need to build them. Without measurement, you cannot begin to assess return on investment.

• Experiment with some micro-targeted campaigns, especially using e-mail direct marketing. Remember to quantify the ROI of these projects.

Finally, prepare for the cyclical return of business. What will you do when your budget returns, along with the economy?

Ellis Booker is editor of BtoB. He can be reached at

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