We had two Greensboro home builders walk into our office in the same week last month. Both had seen revenue drop roughly 35 percent since September. The first told us he was cutting marketing entirely until the market came back. The second told us he was doubling his marketing budget because his competitors were doing exactly what the first builder was doing. Six months from now one of them is going to look very smart and one of them is going to be invisible.
The Pattern Every Recession Repeats
Marketing research from the early 1980s recession, the early 1990s recession, and the 2001 downturn shows the same pattern: businesses that maintained or grew marketing spend during the recession came out the other side with materially larger market share than competitors who cut. The reason is simple. Marketing is an auction. When competitors withdraw, the cost to reach prospects drops sharply.
What Is Actually Happening in the Triad Right Now
- →Yellow Pages renewals are getting cancelled across Greensboro, Winston-Salem, and High Point at a rate the reps have never seen.
- →Newspaper and magazine ad rates are negotiable for the first time in a decade. Some publications will run a full page for 60 cents on the dollar.
- →Google AdWords cost-per-click on local Triad keywords has dropped in many service categories as competitors pull spend.
- →Demand has not vanished. People still need attorneys, dentists, plumbers, and HVAC repair. The pie is smaller, but the pie is still there.
The Smart Recession Marketing Playbook
- →Cut what cannot be measured. If you do not know what your Yellow Pages ad, magazine spread, or radio spot produced last quarter, that is the first thing to cut.
- →Double down on what is measurable. Web traffic, AdWords clicks, and form submissions are countable. Reallocate cut budget into channels you can prove are working.
- →Mine your existing customers harder. A repeat customer costs nothing in acquisition. A referral from a happy customer costs almost nothing. Focus the discretionary budget here.
- →Negotiate every contract. Print, broadcast, and outdoor are all negotiable in 2009. Vendors would rather take 70 cents than zero.
The two Greensboro home builders made opposite choices. We will know in 2010 who got it right. The historical record suggests the second one will.
Read the companion pieces on loyalty and repeat-customer programs and discount strategy without devaluing your brand, or have our digital marketing agency rebuild your marketing budget around measurable channels.