Posted by Michael, Griffin York & Krause Marketing Strategy
The World’s developed economies, hammered by the trouble and turmoil caused by the financial sector, have finally subdued to the ever-growing black cloud of a world recession. The Organization for Economic Cooperation, located in Paris, predicted the United States economy would contract next year by 0.9%, Japan’s by 0.1% and the Euro area by 0.5%. If those statistics are not proof enough, a recent report by the Commerce Department said that retail sales fell by 2.8% in October, a record amount, surpassing the old mark of 2.65% in November 2001. If history has taught advertisers anything, it is a safe bet to think that a world recession will impact advertising budgets as companies and consumers will have less money to spend than previous years. There are, however, a couple of ideas that marketers should keep in mind when trying to market success in a recession.
Over the years, clients have demanded concrete results from their marketing agencies regarding ROI (return-on-investment); expect this trend to continue to grow and become an ever-growing client concern. As advertising budgets shrink or evaporate due to the economic crisis, clients are going to be more cautious then ever when it comes to spending money on advertising. In a recession, marketers are going to be forced to think differently about how to spend advertising dollars. Clients will be less willing to spend their limited marketing dollars on unproved marketing mediums and will be more willing to stick to proven methods. Expect the recession to directly impact the promotional mix with marketers focusing on the use of proven traditional techniques while a limited amount of risk takers will gamble on experimental techniques.
The medium that is predicted to see the largest growth due to economic crisis is the Internet. Due to its intrinsic reporting nature, the Internet is the number one justifiable medium for marketers to allocate their dollars. Other factors helping to drive the growth of the Internet, is that over 70% of Individuals in North America have internet capabilities, and time being spent on the Internet is growing at a rate faster than any other medium. As long as the Internet provides realistic information to advertisers and companies about its effectiveness, it will continue to see an increase in advertising revenue.
Experimental marketing mediums and tactics including mobile and virtual worlds are going to be affected the most by the recession. As dollars become ever increasingly valuable for client’s, unproved, non-traditional tactics are going to be viewed as risky and unworthy expenses. Mobile marketing, once projected to be the next “Internet”, has failed to catch on in America. Without a number of success stories or justifiable proof, mobile marketing is not going to be the tactic of choice for companies who are slashing advertising budgets. Virtual worlds, such as second life, have created an online environment where consumers interact with one another; however, there are not many successful brand stories related to virtual worlds. Without the statistics and results to back up the tactics, expect to see advertisers stay away from methods that are more of a test and see what happens experiment.
Marketers and advertisers who are able to adjust, understand and alter the ways in which they view the promotional mix will be able to strategically position themselves and their clients for success in these tough economic times. Companies and marketers who start to develop successful marketing campaigns should be wary of competitors who will try to follow their coat tails as it is easier to copy someone else then to differentiate yourself. Finally, the recession will also produce a number of opportunities. If a company or agency should somehow develop or create a unique cost-effective mobile marketing campaign that touts tangible results, then be prepared to see an influx of work.