The Downturn’s New Rules for Marketers

So I just read an article of the same name that was in The McKinsey Quarterly. It explains (and I’m paraphrasing the 11 pages) how the global recession is changing how cash-strapped marketers have to operate in 2009. A ‘reprioritising’ of geographies, consumer segments, b-2-b opportunities, sales & marketing resources, adverting vehicles etc.

To an extent I agree. A reprioritisation of geographies does seem to make sense. I’m sure we’ll see a number of organisations re-org their staff and budgets when it comes it the never-ending central/disbursed models of marketing. I’ve worked client side both in the central office (using centralised budgets) and out in the dim and distant field (where local budgets were fort over and sometimes even measured). Both have their advantages and disadvantages, but for sure a centralised model will save money (but whether it will produce a greater ROI is a discussion for another time).

I am also in agreement that measurement needs to be stepped up and looked at more closely. The era of “oh, lets just sponsor this event because it sounds like a good idea” is not particularly savvy in this environment.

But here’s the thing. It’s really very simple for marketers to cut their budget and prove an ever increasing ROI. The old ad adage is "I know half of my advertising spend is wasted; I just don't know which half." Sod it. Cut half of it – any half - because that’s where the saving needs to come from. Want to know how to still increase your ROI? Then read on…

A large international client came to our agency recently and said they needed to cut their marketing budget by 75% across the board. Every agency they were working with was getting cut – design, media buying, media monitoring, PR, events, POS etc etc.

Our arguments to NOT cut the PR budget but actually increase it included...

1 – A relatively small dollar decrease in budget significantly reduces the amount of PR coverage obtainable.

2 – Unfortunately PR is not like a water tap that can be turned on and off. It’s easy to loose SOV (share of voice), but takes many months to build it up.

3 – The percentage of marketing budget spent on PR is comparatively small. A smaller percentage saving from the advertising or event budget can save an organisation considerably more money and allow PR (which has a low cost and a high ROI) to flourish.

4 – The reduction of monthly PR retainer of, for example, 25% (lets say from $10,000 to $7,500) is equivalent to the same cost saving of one page print advert a quarter in an average industry magazine.

5 – Strategically speaking, many organisations are about to go through a rough time in the media due to a reduction in sales, profit, a falling share price and reduced workforce. No amount of advertising is going to repair the bad press that job losses will promote – the only way to manage this is going to be PR.

So in a time of economic downturn – cut your advertising by 50% and increase your public relations by 25%. Not only will you greatly reduce your marketing budget (by about 45%), you will also safeguard your brand, increase your ROI and in the long term have greater marketing success.