Just about every company is implementing cost-cutting measures to deal with the current recession. In many cases, companies are significantly cutting their advertising budget. A number of recent studies have come out that would suggest this is a significant mistake. Indeed, a recent research study by McGraw-Hill of 600 businesses found businesses that maintained or increased their ad spend saw higher sales growth during a recession and in the years following. The study found those who maintained or increased their ad budgets experienced a 256% increase in sales compared to those who cut their budgets.

Armed with this information, the prudent course would suggest a company maintain or increase its advertising budget during the current recession. Agree? Actually, this is a trick question. It’s similar to saying “practice makes perfect.” However, that’s simply not true. Only perfect practice makes perfect. This is also true of advertising. A significant amount of money can be easily wasted by advertising in the wrong media. For example, the phonebook is infrequently used to find business services. The go to source today has become Internet search engines. I doubt few would argue with this. Many of us use a search engine, like Google, every day. In my own case, which I believe is representative, I rarely use the phonebook to find goods and services. Today, Google is even used to find phone numbers. In effect, it has replaced the phonebook. Therefore, advertising in the phonebook would likely yield a poor return on investment.

Getting results in today’s economy

As the president of an Internet marketing company, it would be self-serving for me to suggest that search engine marketing is where a company should spend its advertising dollars. Not only would that be self-serving, but in my opinion it would be a half truth. Getting results in today’s recession economy requires a new approach. I believe the new mantra should be promotion during a recession, not simply advertising.

Obviously search engine advertising has its place and deserves serious consideration when developing your marketing communication plan. However, there are numerous other marketing, public relations and sales thrusts that deserve equal consideration.

Here are some to consider:

Search Engine Optimized Website

Every company, from a one-person consultancy to a Fortune 500 enterprise, needs a search engine optimized Website equal to or better than the competition they face in the marketplace. Let’s face reality. The go-to source for information has become Internet search engines. Having a competitive Website is simply not enough. Statistics show that approximately 90% of all Websites are found as the result of a search. Therefore, if your Website is not found in the search engines, and more specifically within the first two pages of search returns, your Website is virtually invisible. 65% of searches stop on the first page of search returns. Only 35% proceed to the second page. Seldom does anyone go further. Therefore, the first step in the new mantra of promotion is to have a search engine optimized Website equal to or better than the competition.

• Read more about search engine optimized web design. (http://www.iblogmarketing.com/2009/06/01/website-design-critical-to-business-success-online-and-off-line/)

Optimized Press Releases

Companies want to work with companies that are busy. They probably don’t teach that in the Harvard business school, but it’s a fact of life. One great way to demonstrate that the company is both busy and in the forefront of its industry is through the use of search engine optimized press releases. When done properly, the search engine optimized press release will rank highly in key news portals, such as Google News and Yahoo! News. Over 70% of journalists use news portals to keep abreast of the news in the industries they cover. In addition, search optimized press releases are picked up by numerous Websites throughout the Internet. This is also a great way to build link popularity (i.e. external links pointing to your Website), which in turn will help your Website rank highly in the search engines.

E-Mail Marketing

E-mail is making a comeback and provides an excellent way to generate leads, increase sales, and keep your company top of mind. I covered this in a recent blog post, E-mail Marketing Soars in Recession.

• Read more about e-mail marketing. (http://www.iblogmarketing.com/2009/05/26/email-marketing-soars-in-recession)

Social Media Marketing

Lastly, consider launching a social media marketing campaign. Social media sites like Facebook, networking sites like LinkedIn, and micro-blogs like Twitter are proving to be highly effective marketing and communication channels. Our agency, TMA E-Marketing, has been helping a wide spectrum of clients, ranging from Fortune 500 enterprises to startups, develop effective social media marketing campaigns tailored to their specific objectives.

• Read more about social media marketing. (http://www.iblogmarketing.com/2009/04/20/social-media-marketing-critical-to-business-success-part-i/)

As an Internet marketing, advertising and public relations agency, we strongly believe in the value of advertising. However, don’t be fooled by statistics that simply hail the merits of advertising in a recession. We believe that the advertising must be strategically targeted to reach the right audience. We also believe in a balanced approach, including the elements discussed above. Don’t simply develop an advertising plan. Develop an integrated marketing communication plan that cost-effectively promotes your company to your target market.

Part 1:  The Current Reality

At this point, almost everyone is being affected by the worst recession since the great depression.  Both small and large businesses alike are scrambling to cut losses and find a way back to profitability.

There is wide agreement that advertising is the lifeblood of business.  Yet, advertising itself is going through a major metamorphosis.  Let’s just look at two key factors:
•    Total advertising spend
•    Shifts in advertising spend to other media, such as the Internet & mobile devices

First, let’s consider total advertising spend.
Forecasted total advertizing spend for 2009, according to the 2008 Starcom MediaVest Group’s Annual Media Futures Report, is predicted to decrease a record 2.4 percent.  This is the largest year-over-year decrease ever predicted.  In my opinion, this forecast may even be optimistic.  For example, Morgan Stanley Research recently published its analysis of U.S. Ad Spend versus the Gross Domestic Product (GDP).  From its data, if the GDP year-over-year growth is flat (2009/2008) the ad spend could decline 4%.  Couple this with the U.S. Federal Reserve’s forecast that the economy won’t see even a moderate recovery until 2010 and a gloomy picture emerges.

Second, let’s consider shifts in advertising spend to other media.
Almost every forecast is predicting advertising expenditures to decrease in traditional media, including print, radio, and television, and migrate to the Internet.  In fact, almost six out of ten national advertisers polled indicated they intended to increase their Internet budget in 2009.  For example, according to Advertising Age, February 21, 2009, GM’s 117-page plan included a statement that the company “will continue to lead the industry in digital and search–marketing capability.”  They also quoted a GM spokeswoman’s elaboration, “You’ll continue to see more digital and social media activation as integral parts of our advertising and marketing efforts, because it’s cost-effective, efficient and allows for deeper customer engagement on their terms.”  GM is not alone in their drive to the Internet.  In the same article, Ad Age quoted a Chrysler spokeswoman, “We are focused on our Interactive lead strategy.  We increased our leads from 270,000 in 2007 to 605,000 in 2008 … We made it easier for customers to submit a request for information on our own Chrysler, Jeep or Dodge site…”

The current reality is that Internet marketing, advertising, and public relations is out performing their traditional counterparts.  However, there are numerous Internet marketing, advertising, and public relations campaign methodologies.  This begs a key question:  What is the right Internet Marketing Plan for my business?

I will address this question in my next post:  Part 2:  The Internet Marketing Plan, which will post on April 6, 2009.