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Keeping Advertising Up In A Down Economy
By: Tama Swan, Associate Editor
Issue: 2009mar
Ask Your Clients, ‘What Will Life Be Like After The Recession?’
When Eric Ekstrand, MAS, had a longtime client tell him the company was retracting its advertising budget due to the recession and—gasp—cutting out all “giveaway items,” he knew he had to do something. “I’ve done some self-promotional items, but nothing where I’ve actually said, ‘Hey, wake up! Promotional products work,’” says Ekstrand, senior vice president of Chagrin Falls, Ohio-based distributor The Mort C. McClennan Co. (UPIC: MCMCC).
He set out searching for information on the importance of marketing in a recession and compiled what he found into a mailer for clients and prospects. “I’m trying to change the concept from giveaway items to an advertising medium that works,” Ekstrand says. “Promotional products can target your audience. They’re a better way of direct marketing.”
But wait, distributors first must tackle the task of convincing clients why they need to advertise at all. Following in the wake of a disappointing 2008, which showed an overall ad spend increase of just 2.8 percent according to media tracking firm Veronis Suhler Stevenson, analysts project an overall decline of 0.4 percent in 2009. The same study projects the direct marketing, promotions and branded entertainment sector will fall by 1.3 percent this year.
So how do you convince buyers not to cease and desist with advertising expenditures? While begging, pleading, whining and crying don’t work (one distributor claims to have tried), understanding the ways and means of recession marketing and effectively communicating them to clients gives you a role both as an expert and as a valuable ally.
“People generally think with a bad economy they should cut advertising because that’s one of the first things they think they have some flexibility with,” says Jan Slater, who studies brand strategy as professor and head of the Department of Advertising at the University of Illinois at Urbana-Champaign. “What they should be doing in a difficult economic time is retain their level of spending, and maybe even up it, because in a tough economic situation they have to work twice as hard to get the sales they normally would.”
Marketers commonly use a set percentage of ad sales as a metric for determining their companies’ ad budgets, but Slater says this method works in an inverse, negative way. “If their sales go down then their advertising dollars go down at a time when their advertising dollars should go up,” she says.
Small But Mighty
As Ekstrand discovered, companies faced with hard times but still determined to advertise often divide their spending into two categories: essential and nonessential. So how does one sell the notion that promotional products are an essential part of the mix?
“In some ways promotional items are like Trojan horses,” says Josh Gordon, author and president of Selling 2.0, a research-based training and consulting service. “They’re free, sometimes they’re small, they’re relatively inexpensive and I guess you could trivialize them … but it’s the result of what the items deliver that’s important. The impact of those small free items being given away and maintaining a presence in the consumer’s environment can be substantial.”
The power behind promotional products lies in their ability for acute targeting and tracking. “With a thought-out promotional marketing campaign, you can guarantee you are reaching your target market,” says Martha Nailor, owner of Narragansett, Rhode Island-based distributor Golden Key Promotions (UPIC: GldnKey). “When you send out or give out a promotional product, the prospect or client will read the literature accompanying it but eventually it will be filed (one way or another). The product sticks around.”
Nailor adds that the goal is to find a product that speaks to your message, and Slater agrees. “What’s more important now than ever is to deliver a pretty strong message on that product,” Slater says. Instead of just printing the name of the company and its contact information, she urges distributors to work with end users on developing a relevant message and putting that on the product. “Have a call to action that will help people keep in mind that whenever they’re in need of what you’re selling they can call you.”
But handing out promotional products can help boost end users’ personas in a more implicit way. Slater notes that the majority of advertising is targeted to people who already buy the products, so advertising works as a reminder. However smaller companies sometimes need to remind customers that they’re there at all. “Those who want to stay in business understand that now is the time to keep their name in the forefront of people’s minds. With so many businesses closing, it’s easy to convince them they need to let prospects know they are still in business and strong,” says Jean McGuire, CAS, of Safety Harbor, Florida-based distributor Geiger/McGuirePro Marketing (UPIC: geiger).
Putting your brand image out there can also subtly suggest that the company has skillfully managed its finances and as a result will stick around a while. “If you are luring in new customers, brand awareness is important. If they see your name out there in times like these, when they get ready for their next purchase they will remember the strength in your brand,” says Jeff Williamson, owner of Clinton, North Carolina-based distributor JDS Advertising, Inc (UPIC: jdsad).
Gifting promotional products to customers and prospects can also stand out as a benevolent gesture in a time when corporations are increasingly being cast as uncompassionate and greedy. However, Gordon says this often runs counterintuitive for marketing execs. They sometimes assume giving stuff away for free when everyone else is tightening their belts and laying people off comes across as irresponsible and frivolous. “This runs contrary to human behavior,” Gordon says. “It’s easy for academics to moralize these things, but when it comes to getting something free most people aren’t moralizing it. Free is always good.”
A Look Back
The history books are dotted with true-life tales of business that maintained or increased ad spending during recessions and, as a result, had surpassed their competitors once things returned to normal. Kellogg’s cereal company used advertising to outsell Post following the Great Depression, and during the 1981-1982 recession this strategy helped Wal-Mart outmaneuver Sears and Gillette pull ahead of Palmolive.
After the 1981-1982 recession ended, McGraw-Hill Research analyzed the performance of 600 companies between 1980 and 1985 and found the businesses that maintained or increased ad expenditures during the recession had significantly higher sales post-economic slump. In fact, companies with aggressive advertising had 256-percent higher sales than companies that didn’t advertise.
Gordon says this happens because people never stop evaluating, judging and accepting or rejecting brands. “There is a psychological process of buying into brands that is ongoing whether you are actually buying products or not,” he says.
Yet sometimes, increased advertising does convince people to make purchases despite the economy. In the past year, Wal-Mart increased its advertising budget by 55.7 percent, or $300 million. Once considered frugal, Wal-Mart’s prolific ad spending has catapulted its rank from No. 9 to No. 2 in spending among competitors in its category. So far this move has paid off for Wal-Mart, whose 2008 fourth quarter sales increased by $1.78 billion over the same pre-recession quarter the year before.
Hyundai experienced an even faster turnaround from its recent surge in advertising. After a rocky fourth quarter in 2008, this January the company spent $3 million in Super Bowl advertising and then purchased more advertising for the rollout of its new Hyundai Assurance program, which lets buyers return vehicles if they lose their income within a year. As a result, Hyundai’s market share doubled and sales rose 14 percent for the month. “They’ve really developed a message that hits close to home,” Slater says of Hyundai’s new return policy.
Money Talks
If all else fails, you can always appeal to end users’ sense of a good deal. Frankly speaking, promotional products are just plain inexpensive compared to other ad buys. “Look at the prices of using the Yellow Pages or a billboard; you could purchase thousands of notebooks with a pen for the same price,” says Steve Bove, CAS, of Monmouth Junction, New Jersey-based distributor Active Imprints (UPIC: ACTIVE).
While price is always important no matter what the economic forecast, offering the lowest price on an item may not be the best solution right now. “Maybe in the past someone ordered 5,000 inexpensive items. Now they may want to order 50 higher-end items and hand them out just to people they’re more involved with or to big prospects,” says Scott LaLoggia, owner of San-Diego, California-based distributor Proforma Pacific Graphics.
Some companies have simply cut budgets to the point that no matter how much they agree with you about keeping up marketing they just don’t have the funds. In this case the best thing to do is just maintain contact. “Those arguments were at the end of 2008,” says Nailor. “Now I am contacting them and discussing plans for 2009. So while I may not have succeeded in getting year-end business from them, I was able to keep communication lines open and have built up a relationship that will help me in 2009.”
Put It In Writing
Important to keep in mind is that the chain of authority for purchase approvals at end-user companies typically changes during a recession, putting the bean counters in charge. “Usually the finance department is looking over the marketing person’s shoulder quite a bit,” says LaLoggia. “Often I put myself in their position in trying to think of what will impress their superior.”
This managerial adjustment can mean the distributor never meets the final decision maker. Gordon says the best defense against this is to make your presentations in document form—either on paper or e-mail—that can carry the sale all by itself without you being there. It’s also important to shape the message from a finance perspective, and be sure to talk about making money or saving it. “A lot of times the person you normally meet with couldn’t care less about that stuff and evaluate criteria they feel more comfortable with,” he says. “Every purchase is subject to much more scrutiny because the dollars are scarcer.”
This is also a good way to introduce the idea that promotional products are the best way to track return on investment. “This is always a fun conversation to have because everyone loves to hear how you can help them achieve ROI and how you can help them convince management with actual numbers and case histories,” Nailor says.
If your ROI evaluations lack strength, there’s no time like a recession to fix it. Gordon says the person looking at the proposal in the finance department cares about ROI very much and won’t be persuaded without it. If you’re not good at providing your own data, there are independent research firms that can evaluate products and their impacts. Or you can request testimonial letters from past clients and achieve the same goal without spending a nickel.
Nailor also counts case histories and samples as must-haves for any recession-era sales meeting because clients like to see how others have used an idea and how the outcome was. “Clients are 90 percent more likely to go with an idea if they can see the actual product in person,” she says. “Having it in their hands is a great way to show the client. It’s more difficult to say no when they are sitting there playing with or using the sample product you brought.”
LaLoggia doesn’t put all his samples in one basket, so to speak, and brings in items from each price category. “[I give] them so many options they feel they have to choose. I just cover all the bases,” he says.
One more tactic to sway end users is to ask them, “What will life be like after the recession ends?” The average recession typically lasts 11 months, but market benefits of using a recession to strategize, advertise and pull ahead of the competition last much longer. “After the layoffs, after the cutbacks, your company will survive and go on to live another day,” says Gordon, “but what will the company look like?”
The same cautionary words apply to distributor companies. “This whole thing really hasn’t quite played out,” says LaLoggia. “I think it’s only been really bad for the past four or five months, and there’s a lot of learning, poking and prodding on our end as distributors.”
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