cropped-sitelogo-2.pngTime to cut back on marketing?


Why now is not the time to cut back on marketing

There’s a bit of panic in the air.

 

The Bank of England has cut interest rates from very little to teeny-weenie. The pound is only worth about twelve ounces, growth forecasts are shrivelling to nothing and business confidence is turning into business timidity. The latest BDO Business Confidence Survey* showed optimism fell to 97.9 in July from 98.9 in June and is still falling. The received wisdom is that if it hits 95 the economy is contracting. So, is it time to hunker down, cut costs and hope for the storm to pass?

 

The answer is emphatically not. A highly regarded McGraw-Hill Research¹ study of more than six hundred businesses found that in the recession of 1981-1982, companies that maintained or increased their promotional spend averaged higher sales growth during the period and in the following three years. Those which had increased that spend saw sales rise by 256% more than their competitors who had cut back during the lean time. Similar studies in the 90s and 2000s have shown a consistent 2.5:1 ratio of increased business between the two groups. The funny thing is, if you want to save cash on marketing the time to do it is when business is booming because everyone else is already doing it. In 2002 the Strategic Planning Institute² found that during periods of strong economic growth 80% of businesses increased their spending without gaining more market share.

 

The funny thing is that in real terms economies only shrink or grow by a very few percentage points at a time so there is still roughly the same amount of business for you to chase now as there was six months ago or there will be six months in the future. However, if things are getting tough you need to spend wisely above all else. If you’re a big company you might push the boat out to the tune of thousands of pounds for TV or national newspaper advertising. If you’re one of the 99.3%³ of UK companies classed as small businesses you’re looking for a lot more bang for a lot fewer bucks. £600 will probably buy you a quarter-page in your local paper for one week. For the same amount you could have half a dozen professionally filmed and edited customer testimonial videos to put on your website and share repeatedly on social media forever. Nothing promotes you more powerfully than the words of your happiest customers and nothing helps you climb the Google rankings more effectively than moving pictures on your website.

 

So, the question remains, as things get tough this time are you going to cutback and hope, or are you going to promote yourself in the best way possible for now and the long term?

 

* http://www.bdo.co.uk/en-gb/news/2016/immediate-decline-in-business-confidence
¹ http://www.mheducation.com/
² http://pimsonline.com/index.htm
³Federation of Small Businesses, Business Population Estimates 2015

 

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