How to Beat (or at least survive) the Credit Crunch
I won’t overdo it with the clichés, but it seems there is hardly a corner of the world remaining that isn’t affected adversely by the global economic crisis. In fact, I find that the vast majority of my meetings with clients these days begin with assessing their marketing needs, but gradually evolve into much more complex conversations touching on aspects from cost-cutting and pricing policies in a credit starved economic environment all the way through to how to gain market share and retain customers and increase loyalty.
I don’t think anyone is either enlightened enough or has the foresight to be able to predict anything to any major degree of accuracy right now, but I have been sitting back over recent months and watching happenings with great interest, both globally as well as in our little pocket of the world. Now that we are approaching the tail end of Q1 2009, I’d like to throw a few theories into the ether and see what comes back my way – hopefully it wont all be abuse!
Appeal to Your Consumer in the “Here and Now”
Tough times mean consumers shy away from luxury and veer towards familiarity, safety and above all value for money. A year ago you may have focused on the great new technologies of your product, or some innovative new design… today you must focus on the value of the purchase, and the safety of the investment for your customer.Focus on flexible payment plans or pricing incentives to encourage consumption of your product, and make sure that your message is focused around comfortable, familiar themes, and easy and risk-free adoption.
Remember, we are facing an uncertain time where consumers are unsure of their spending power in the coming months. You need to adjust your product mix, or at least the advertising of your product mix, on ease of use, reliability, durability, value for money and performance.
Negative to Positive: Increase Market Share
Some brands can use an economic downturn to their advantage. For example, cash rich or credit free companies can take advantage of others with weaker balance sheets to either muscle them out of business or acquire them.
From a marketing perspective, smart and aggressive advertising can consolidate market position in tough times, keep your brand top of mind in the battle for the reduced spending capacity of consumers, and ensure that you win market share when those around you failing. It’s the classic survival of the fittest, and those that dwell for too long will miss the boat for sure.
The Shift to Online
As above, branding spend is as important if not more important than ever – but the spend needs to be smarter. We in the world of online have almost grown tired of hearing ourselves go on about the cost-effectiveness of our medium, but here is where the rubber hits the road. We must convince our clients that even though the $ amounts may be going down, activity must still rise – and the only way to do this is a shift of massive offline spend to more modest online spend.
Marketers will be able to monitor their ad campaigns, target more effectively and have more control over creative and timing elements than ever before.
I have heard many clients say that they are looking not only shift more budgets to online, but also from branding campaigns to tactical ones. My one note on this is that as important as it is to get the tactical campaigns right – a focus on affordable, high performance products can do wonders for a company’s short term cash flow – it is still of high importance to stay top of mind with consistently high quality branding campaigns. Now is not the time to let your competitors become your customers’ helping hand in troubled waters.
The Role of the Media Agency
I am very (very) used to being asked the following question by my customers: “What rate do we get if we go direct with you instead of through the agency?”. This may seem a perfectly reasonable question, but if you read between the lines, this thought process betrays an underlying perception of the role of agencies, in that they are predominantly a vehicle to secure discounts through their healthy buying power.
Now the 6 or 7 leading Media Agencies in the UAE (according to yours truly) have differentiated themselves by distancing themselves from the concept of being merely a buying tool, and have built their market share on the basis of being a strategic partner to their clients. The value that they add in the strategizing, demographic profiling and decision making – as well as their knowledge of the quality mediums available – make them indispensible to their clients, thereby reducing the relative importance of their ability to negotiate discounts. Besides, the client portfolios that they develop through this methodology means that they naturally will have greater buying power as a result – a classic example of putting the horse before the cart!
So in short, I believe that if all media agencies evolve their relationships in this manner, and solidify their knowledge of online, we will see unbelievable growth in our industry as a result. This is happening slowly but surely, but the current climate gives us an unexpected opportunity to expedite the process.
I hope the above was more of a balance set of thoughts, written more to inspire thought than to shape opinion. Either way, it will be interesting to look back at this period in a year’s time and see what transpired – maybe global warming or an alien invasion will get us all before we even need to panic about such trivial matters as a credit crunch!
I would love to hear your thoughts – please comment if you have any!
In the meantime, Bayt.com is there to help you plan for all of your online advertising needs.
Ali
April 8th, 2009 at 10:51 pm
Interesting reading.
I think that this most certainly is an opportunity for cash rich, infrastructurally strong companies to start dominating the market, both through advertising spend as well as aggressive buy-outs. I guess its like the buffalo theory – the weak get picked off by predators, famine, fatique etc but the strong survive and the herd gets stronger as a collective. Or something like that.
Not sure I agree with you that media agencies bear the burden of strengthening the relationships between themselves and their clients – I am on the client side myself and I reckon that 90% of the “blame” lies on the shoulders of clients who tend to be short-sided, and do not create an environment whereby their agencies can give honest – sometimes brutal – feedback and be a real guiding light
Interesting to see bayt talking about something other than recruitment… you guys changing your focus?
April 9th, 2009 at 5:22 pm
Hi Reggie,
Thanks for your reply. I like that theory – hope you’re right.
In terms of agencies and clients, I dont disagree at all. But I think the onus is usually on the service provider to give a compelling enough reason for take up of their service. I agree that sometimes financial / resource constraints do not allow for a huge amount of time or bargaining power, and the “client is always right” mentally can be difficult to overcome, but my answer to that is that if it already being done by the leading agencies then the proof is in the pudding as the saying goes.
My main point is this – in the US and Western European markets we have already seen Online win market share from other mediums over the last few years (approx 20% of total advertising spend in those markets is on Online). That has very much been led by rising internet penetration, quality mediums offering high engagement and great advertising opportunities and improving technologies……. but behind the scenes it is the partnerships between all those involved – the media owners, the agencies and the brands – that has really allowed the medium to flourish. That will happen here, of that I am in no doubt.
Thanks again for your comment
Ali
April 9th, 2009 at 5:30 pm
oh I almost forgot to answer your last point.
As you probably already know, Bayt.com is the MIddle East’s number 1 job site. As such, we have the most number of registered users and clients, and as a natural by product of regestering a profile and CV on a job site, there is a natural amount of engagement and trust that is required… our users tend to spend a lot of time on our website and they tell us a lot about themselves
As such, when we serve advertising on behalf of our MARKETING clients, it tends to be highly targeted, hghly relevant and therefore more appreciated by our users.
Our focus has always been to provide our users with the best quality offerings when they choose to visit our website, whether its job postings, or banners offering flights, real estate or restaurants… so no, we have not changed our focus at all
April 14th, 2009 at 1:45 am
You are 100% correct about the shift from the expensive offline to the inexpensive and trackable online spend. At Hydra, where I do some consulting, we see this trend. Whats more is that you can get much better ROI by utilizing Cost Per Action (CPA). This lets you set a budget for a specific action. In this economic climate, advertisers are not spending less, they are spending smarter and want more results for their money. CPA does this most effectively.
April 15th, 2009 at 11:06 pm
Absolutely Sue. I think CPA works really well for some business models, especially ones designed for e-commerce (whether it be sales or lead generation).
This of course does not bring into consideration branding opportunities available online. There is a real opportunity for brands to create a dialogue with their prospects / consumers, ultimately giving them the capability to build relationships and loyalty that will be difficult to combat.
So I guess I’m saying that online allows for direct planning and results based ad campaigns like teh ones you mention as well as the chance to go “deeper” than any other medium with the user experience it can offer