Swimming Against the Tide: What Happens When You Maintain Your Marketing Focus Through A Downturn?
Why you should Maintain Your Marketing Spend through the current Downturn and how to make every pound count.
A recent survey of investment advisers serving High Net Worth Individuals, which my PR agency designed for one of our fintech clients, found that nearly 85% of advisers believe the current COVID-19-generated recession will be over by Q2 2021. So, at the very least we have six months more of tough economic conditions to trade through before we begin to see real economic growth.
Most leaders of businesses have revised their growth numbers downwards and reduced costs where they have been able to. As I know all too well, when tech firms are expecting to have to fight harder for new sales they often cut marketing and PR budgets. The rationale runs as follows:
“Whatever campaigns we run over the next six months, won’t deliver Return on Investment within this tough trading period, so the best thing to do is to postpone or cut it…..and while you’re at it, why don’t we put that PR agency out to pasture until things turn around?…”
Having run a PR agency myself through 3 seismic downturns in 2001-2003, 2008-2013 and now 2020-21, I know through bitter experience that this happens surprisingly quickly when downturns bite.
However, there are always some unusual tech businesses which decide to use a downturn as a moment to maintain or accelerate marketing investment. ‘Why do they do that?’, I hear you ask.
I decided to take a closer look in this blog at why some leaders choose to swim against the tide in terms of marketing spend and what happens when they do. For this purpose, I interviewed an ex-client of mine which came back to us just last month after a break of over three years.
I put a few questions to him and wrote down his verbal responses below. His answers proved to be very instructive for me and I hope they will be for you too…
Q1 What growth forecast have you set for the current financial year?
“It’s been interesting. Although entry level and cheaper branded products which we sell through our web shop, especially Chinese-branded products, have seen reduced sales volumes and even reducing margins on those sales; these losses have been recovered through a definite flight to quality, to the premium, trusted brands.
Spotting this trend, we’ve also invested more ourselves in bolstering our own value added services and support packages on the installation side of the business.
With all this investment in supporting our customers better, we are starting to get some positive feedback. We know that if we continue pushing hard to add more value to customers’ systems, it will set us in good stead as the market turns. The trick is to look beyond any immediate negatives, to the outlook looking into next year.
Q2. What is the key to successfully trading through downturns such as 2008-2012 and the current 2020-2021 period?
Keep investing in the business. Don’t stop planning for growth. Never give up trying to add value even if that means sacrificing margin in the short term. Always remember downturns will, eventually, end and the key is to be well positioned for growth when that happens.
Q3.You told me for the last 3 years or so you went with a marketing automation approach but that you were not convinced about it. Why not?
Marketing Automation requires a huge amount of investment, both in-house and normally using a digital marketing agency. It demands significant integration between your CRM system and normally plugging in and getting trained on a new marketing automation suite like HubSpot or Pardot. It can take two to three years to start realising significant value.
My view is that this approach requires big budgets and very skilled marketing people in-house as well as agency side. It’s for enterprises with £500m+ annual sales who have deep pockets that can keep pumping the campaigns through and have endless supplies of great content.
I’ve known even large global businesses which have really struggle with it in our market. Perhaps then, as an SMB technology business, it’s no surprise it took too long to see ROI from marketing automation.
Q4. How quickly do you need ROI to come through on marketing/PR spend, and does that window shorten in tougher market conditions? In other words, does your marketing dollar need to work harder for you right now?
You must be prepared to stick with a new campaign for more than a year, especially if you are expanding your offerings or wanting to change how you present yourself. Right now, we are tapping into new market requirements.
Some of the work we are doing with Agility PR is about validating that we are on track. We will then work with you to communicate with great confidence that the products and services we are offering are a good fit for where many firms are right now.
Q5. Why specifically did you elect to come back to Agility PR? What were you looking for, for your website and more widely?
Agility PR is not the cheapest PR agency out there, but we aren’t the cheapest in our market either, so the fit is right. I came back to you because I need to move quickly. Time is not on our hands right now (because of the downturn). All business decisions I make need to be geared to reducing risk….and that means partnering with suppliers I know I can trust and ideally have a track record of working well with.
What I enjoyed about working with Agility PR before is that partnership element. I can share the businesses challenges and we can work together on communications and content solutions which are geared to making a difference. There’s no wasted effort, no spraying of bullets hoping one will hit the target eventually. I’m increasing my chances of success by taking risk out of my supplier selection.
I know once we’ve worked out what we are saying to whom, Agility PR can produce content which is at once compelling and high quality. They produce the type of content which makes you sit up and take notice. The other advantage is it tends to be media ready so we can get some coverage as well as put more great content up on our website.”
Q6. Is there some value for you in projecting your business positively even in the toughest of times?
The advantage of being out there communicating during a downturn is that you get more air time than you do normally. In other words, there aren’t nearly as many people pumping out content or seeking media attention. You can get heard more easily. You get a larger share of voice for the same money. And if you want to advertise you can secure bargains. Put simply, you can move faster and be seen to move faster to meet changing market needs.
And Yes, this is the right time to be investing more in your content and PR campaigns but make sure your messaging is right first. Make sure you have something to say which truly meets the changing needs of the customer. You need to recognise that market requirements have changed, some IT trends have accelerated for example. Are you reflecting that change in your offerings?
In my view, what’s achievable in 18 months in normal times is possible in just 6 months during a downturn if you are agile enough to adjust to the market need; then jump on the change and communicate that you’ve jumped on it to the people that matter….all in double quick time.
Q7. Would you describe yourself as an optimist or a pragmatist?
You don’t have to be an optimist to invest in your marketing and PR during the downturn. I’m a pragmatist, I just know it’s critical to adjust to accelerating changes in the markets we are serving and then communicate those adjustments effectively if we are going to be in good shape to trade through even a prolonged downturn and then arrive at the other end on the front foot. Think of it like our version of Building Back Better.
What did I learn from the above chat with my new client?
I’ve used the above to create my ‘7 rules to Building Back Better during the current downturn’:
1. Never underestimate the importance of solid trusted relationships in business – even if they’ve lapsed. If you did a good job for a customer in the past they should be your first port of call for a new business call or catch up email now.
2. Partner with people who you know you can work with. If the chemistry is right, and ideally you’ve been able to carry out a quick trial working together and that worked well, don’t hesitate to try to forge a closer working relationship.
3. You can get way more ‘bang for buck’ from marketing spend in downturn – making your marketing & PR spend work more effectively for you simply because there is less competition for your targets’ attention.
4. Work hard on enhancing your product and services so that they are tailored more precisely to the changing needs of your customers.
5. If you don’t feel you know enough about what changes your prospects are experiencing – conduct some market research to find out more about their pressures, any new drivers and requirements and work fast on making changes to your products and services to reflect what you’ve learnt.
6. Don’t take unnecessary risks in hiring or taking on a supplier. Only work with people you know do a good job or have done a good job for a business in your market that you respect.
7. Beware of the ‘marketing automatons’: Marketing Automation is best carried out by large enterprises with big budgets. If you are an SMB, don’t expect big results quickly if you go down this route. Remember any communication strategy ultimately depends on producing and distributing valuable, high quality content.
The author of this piece, Miles Clayton, will be offering a free webinar entitled ‘Discover how to ensure your marketing spend is delivering’ (through a downturn), from 11AM to 12.30PM on Friday 9th October 2020. Sign up here if you want to attend: https://www.eventbrite.co.uk/manage/events/122103194943/details