Despite economic downturn, marketing budgets continue to grow.
For brands grappling with how to market themselves during the recession, there's light at the end of the tunnel. Despite the current downturn, marketing budgets are up and consumers are spending, albeit cautiously.
Conventional wisdom tells us that when the going gets rough, both consumers and marketers get tough on excess spending, and that might be true. But recent studies suggest that despite the current economic downturn that just won’t stop, marketing budgets are up and the industry is hopeful. In a report on business-to-business marketing released earlier this year, Forrester Research found the average marketing budget will increase nearly 7% this year over 2010, with the largest spending increases expected to come from technology service companies, the financial sector and the makers of high-tech gadgets. While that likely doesn’t come as a total surprise, this might: the Forrester study also found that smaller companies are more likely to increase their marketing budgets over large ones, since the need to grow one’s brand doesn’t stop and drop with Wall Street. It seems counter-intuitive, but recessions have proven to be good for marketers and brands alike. Simply put, just because consumers have less to spend doesn’t mean they’re not spending. However, they are shopping with a discerning pocketbook, which is why marketers best keep on their toes and be ready to make adjustments on the fly.
Maybe I’m just blogging out loud, but it seems like — metaphorically speaking — marketing during a recession is equal parts determination and perspiration. Preparation and inspiration is key to seeing brands through the slump.
History is ripe with lessons of brands that have turned a bad economy into a golden business opportunity. As conventional wisdom is also happy to remind us, consumers are more likely to question their spending habits during bad times. Moreover, it’s during a recession that consumers gravitate toward brands that continue to communicate with them. A golden opportunity exists for brands to turn the dial up on its marketing programs – from coupons and social media marketing, to product demos and exclusive merchandise offers. But by taking the lead on brand marketing during a recession, it is equally important to stay in touch with consumer purchase patterns. The Wall Street Journal reported yesterday on another recession trend: consumer’s “trading down,” or the act of consumers abandoning long-time preferred brands in favor of more affordable ones. Specifically, the article looked at how Proctor & Gamble has adapted to the financial shift: “It’s required us to think differently about our product portfolio and how to please the high-end and low-end markets,” says the company’s North American group president. One technology that’s been helping brands do just that for years is search engine marketing (SEM). With U.S. consumers turning to the Internet for more than 1/5 of their media needs, it’s no wonder that SEM numbers continue to grow while traditional mediums stagnate. As my Vertical Marketing Network colleagues and I like to discuss at length, the Internet may very well be the savvy marketer’s greatest ally during this or any future downturn, which is why Vertical is heavily involved in the planning and development of SEM programs for its clients that take advantage of the vast reach, minimal cost and precise targeting of the web. Tough times call for calculated measures, all right, and it seems marketers have their work cut out for them.
How are you adapting your marketing efforts? Please share your thoughts.