Andrew FrankI’m not a historian, but I’m pretty sure that in ancient Rome, whenever the economy took a dive, all across the land CFOs and CMOs would meet and argue about whether to cut the budget for painting signs on the city walls.
“Necessito pro populus specto nostrum insigne!” the CMO would shout.
“Necessito nostrum argentum conservo,” the CFO would reply.
This dialog continues in modern times. Today, CMOs can point to a large body of evidence that companies which cut brand marketing budgets in a recession are generally worse off in the long run than those that don’t. CFOs, faced with limited options, will continue to cut all spending that can’t be directly tied to revenue.
Historically this has been good news for sales promoters and direct marketing firms willing tie fees to performance, and bad news for mainstream media. Today we see Google benefiting from this effect, as search marketers have been adept at demonstrating the direct connection between clicks and sales.
But, runs the refrain, what about branding?
This may be the first recession for which we can see glimmers of solutions to the long sought problem of making brand advertising accountable. Although it will never be possible to eliminate risk from advertising, the tools that are now emerging for measuring the effects of brand messages (both one’s own and one’s competitors’) all the way down the sales funnel are making marketing investments far more transparent and accountable than at any time in history.
The tools I’m talking about are the subject of an upcoming research note, but here’s one thought to tie this back to some recent conversations about social media: when heading into the next ad budget meeting, arm yourself with some examples of dialogs occurring about your brand and your competition in the social media sphere. Ask the question, what do you think will happen if we stop the conversation with our customers?
Then start talking about reallocating spending to media that are more effective and measurable than the old viaduct walls.
Category: Uncategorized Tags: Advertising, Advertising Metrics, Branding, Marketing, Measurement, Recession, Social Media Monitors
5 responses so far ↓
1 » The Recession Marketing Dialog October 24, 2008 at 11:25 am
[...] Today, CMOs can point to a large body of evidence that companies which cut brand marketing budgets in a recession are generally worse off in the long run than those that don’t. CFOs, faced with limited options, will continue to cut all … The Recession Marketing Dialog [...]
2 Ben Waugh October 24, 2008 at 11:54 am
Nice writing style. I look forward to reading more in the future.
3 Whit Andrews October 24, 2008 at 9:00 pm
I think what you’re saying here is, “Caveat emptor.”
4 Bill Rattner December 31, 2008 at 10:54 am
What if Marketing became part of Cost Of Sales?
This is a short question with a potentially massive impact. There would be no need for a marketing budget because it would be line item…a line item in that particular line of businesses’ Cost Of Sales.
I’m not suggesting that all Marketing departments close down immediately, rather that *in some cases* the marketing function might work better as a cost of sales line item.
It would require CMOs that think like CFOs and vice versa (Dogs and cats living together in blissful harmony, I know.) but it might be just crazy enough to work in some industries.
5 Andrew December 31, 2008 at 2:31 pm
Since Bill and I worked together for so many years, I know him as not just a great creative director but also a truly funny amateur commedian, so I know he’s just joking when he suggests accounting for all marketing as “Cost of Sales,” right Bill? Right??
Seriously, this is not an uncommon reaction to tough economics, and I’ve heard these comments echoed increasingly elsewhere. For instance, read this commentary from Steve Lanzano of media agency MPG: http://www.jackmyers.com/commentary/media-business-report/36222794.html
The crux of the problem here IMO is how we deal with marketing activities whose effects on sales are (currently) not precisely measurable. The CFO mind tends to view unmeasurable investments with extreme skepticism, while the CMO tends to take as an article of faith the idea that branding and other indirect demand generation activities are key elements of business success, even if their effect on sales is delayed and indirect (and even disputable in many cases).
Naturally, as Bill implies, many industries seem to do just fine on pure direct marketing (mostly B2B, up the supply chain), but consumer goods?