Re: Advertising Budget Cuts

From: Miki Dzugan <mdzugan_at_markneting.com>
Date: Thu 03 May 2001 11:47:10 -0500

HEATHER CARROLL <Heather_at_Enginehousemedia.com> WROTE:

> With all of the expertise available on this list, I
> wanted to get some various qualified reasons as to why
> companies should resist severly handicapping or cutting
> their advertising budgets out in times of market downturns.

> Anyone want to comment on this?

I'll take the bait. As we all know, what has happened
in the current market is that investors have awakened
from their euphoric dreams of making a bundle on the
next hypedsite.com IPO and gone back to investing in
fundamentals. Fundamentally, that means that they
expect the venture to make a profit.

There are two ways to make a profit, get more sales or
trim costs. Assuming that the company is already trying
to get more sales, trimming costs seems to be the viable
option, especially if the marketplace is cutting back
on purchases. One of the perennial favorites to cut is
the marketing/advertising budget, especially those
activities which are not producing immediate sales.

If you have management that is determined to cut back
on their advertising budget, you need to be prepared
to demonstrate that the expenses they plan to cut will,
in fact, result in loss of sales greater than the
amount of the cutback. Arguments involving long-term
benefits of continued advertising (branding) will fall
on deaf ears when a company is facing an immediate
problem.

If you are trying to sell advertising to companies,
this is the time to pitch those products that have
the best response rate -- think ROI.

Another tactic would be to seek clients whose
businesses that are "recession proof." A good example
of such a business is voice teleconferencing. When the
economy goes down, businesses use teleconferencing
instead of travel to reduce costs.

I will be interested to see others' responses to your
question.
--
Miki Dzugan
MARKnETING
Integrating the 'net into your marketing.
http://www.markneting.com
651-454-5323



Received on Thu May 03 2001 - 11:47:10 CDT