Businesses’ Marketing Return On Investment During A Recession

Our economy has started to slow down due to escalating prices of fossil fuels, ie gasoline and oil, high interests rates, and global security instability. Many companies are beginning to feel the ever tightening strain on the purse strings of the pocket book. Looking to cut costs wherever possible, marketing and advertising budgets are dramatically reduced. The question your firm has to answer is how to make or generate sales at the lower cost of doing business. Exploring the options available to your firm is what I want to talk about today.

The first idea is how to make more money with less sales. The return on investment is how much money the company makes overall on a project or department. Assuming you are now convinced that it makes good sense to recession-proof your marketing and sales efforts, where do you begin? Unfortunately, all too often the response is one of quick, across-the-board cuts. Or the largest and most indirect budget items such as advertising or market research get the ax. While this approach is obviously the quickest and easiest, it may well put your organization at even greater risk of your own future recession. It is not likely that our economy is coming to an end tomorrow, so there is still time to take a thoughtful approach to recession-proofing your marketing and sales efforts. A good example of this would be: Company X spends $100 to make $200. Company Z spends 25$ to make $150. Company Z has a higher ROI even though they spent less and sold less. All decisions on how the company functions should be based off of this idea. Marketing smarter is one way to earn a competitive advantage over rival companies.

So what is smarter marketing?

Marketing should be two-fold. One is to get the message out of what the company does or sells. The other is to get this message out to the customers looking for such items or services. How smart is it to advertise in a magazine that targets businesses? While a small portion of the readers may be interested in your product, in general, many of the readers just skip right over your ad. Everyone would agree that this would be a waste of the marketing budget. Instead of advertising in a print ad in some magazine or newspaper where the targeted audience may or may not read it, search engines allow for more of the segmented market to directly find your web site and your products. Thus, one could spend the same amount to get the company’s website a higher rank in a search engine instead of placing ads in such mediums as magazines and newspapers. Smarter marketing campaigns are needed to make this company successful. Smarter marketing would have the company place money into acquiring a higher rank on all search engines. Customers are always looking for products and services specific to their needs and wants. One of the most common of all marketing and sales errors is the lack of focus on specific targeted market segments, accounts and customers. Recession or not, no organization can afford to be all things to all people, or afford to be in front of every potential customer at all times. When the customer searches for key words, companies that rank for them pop up on the computer screen. What other medium can boost that almost everyone looking at the web site is a serious buyer of the product? Having the company’s rank high is the only way to generate traffic from this source of potential consumers. This is where Search Engine Optimization(SEO) firm really shines. Lets look at our example again. Company Z has done a much better job at their marketing campaign than Company X. In times of recession, Company X’s strategy is going to slowly erode profits as sales get lower and lower. In other words, lets cut both companies sales by half. Company X is now just breaking even, while Company Z is still making $50. Tight times financially benefits the companies doing more with less.

A second option for companies during hard times is to lay workers off. The company’s marketing department goes from five people to two. The company has just saved $100,000/year from the salaries of those three workers. Hiring a SEO firm to help pick up the slack at $15,000/year is a dramatic lowering of the overall expenses. This is how ROI and smarter marketing can help the company stay competitive during recession. The sales of the company would have to be lower than the $85,000 the company saved through this reallocating of funds for this to be the wrong move. A quality SEO firm tends to increase sales, not decrease the company’s sales. Picking a good SEO firm can be tricky, but with a little investigative work a company can find a good solid SEO firm A good SEO firm is a company’s best friend during a recession. Not only is more traffic and sales generated, but the overall budget is reduced dramatically for the company. Whether the company is a small one or a large one, smarter marketing in a recession will help the overall financial statements for the company.

A third option is when a company actually decides to invest in marketing on the Internet. What is more economically sound, pay per click or organically ranking? During good times, the company budget for advertising may be skies the limit. However, during recession, dramatic decreases in overall budgets make smarter marketing look even better and more lucrative. Pay per click budget, while allowing the company a good chance to be on the first page of a customer search, costs a lot more than organic ranking. Both require some amount of professional help (SEO firm) costs to the company. With invalid clicks and lower budgets from the recession, pay per click runs through the company’s entire budget quickly. A company that modifies their website on the advice of a SEO firm has a better chance of keeping costs down and in return, make more money from the investment. Back to out example: Company X spent half their budget on pay per click and only generated $75 from it for a ROI of $25. Company Z spent $20 on getting organically ranked and generated the same $75. Both companies were on the first page of a search engine and shared equal market share of the customers. Company Z’s ROI of $55 is more than twice that of Company X. Smarter marketing wins out every time during a recession.

The fourth option might even be that a person has been laid off because of the recession. Since no one will hire them, starting a new business is what they decide to do. Like ever other small business, the funds for advertising and marketing are limited. Competing with well-established companies makes it hard to find the niche the newly formed company needs to stay financially stable. How could a SEO firm help them achieve this goal? The answer is simply that smarter marketing and allocating of advertising dollars is the only conclusion through careful and thoughtful consulting by an SEO firm. A SEO firm can help the company reach more customers quicker for less money than any other source of advertising medium on this planet. The ROI has to be a positive number for the company to spread its wings and fly. The small company just started now has the ability to generate sales through higher ranking on the Internet for certain key words that describe the business to a tee. Getting the small business started off well during the recession will make the new business excited to think of the possibilities when the economy starts to turn around. Most small businesses fail in the first six months because marketing was never taken into account. The only action that generates money is marketing. Everything else relies on the fact that the marketers did the job sufficiently enough to get potential consumers to the place of business.

The last and fifth option for a company during a recession is to have a aggressive marketing approach. Spending more to completely dominate and crush the rival companies might help the company in the long run. Going back to our two companies, Company X started with spending $100 to make $200. During a recession, Company X takes the attitude of spending $150 to grab a larger market share. Many companies adopt this type of strategy to help position themselves as the industry leader when the economy picks up. While this is risky, Company X might be better off to adopt the same strategy as Company Z and spend the same amount as they always have on marketing. The $100 dollars spent smarter might be able to generate $250. Without changing the budget, a larger market share could be achieved through smarter marketing even though the country and the global economy are in a recession. The only way to know is to have a SEO firm consult on the company’s website.