July 2009 Franchising World
  
Cutting your marketing budget is akin to being in a war and cutting your budget for bullets. 

By David LaBonte
      
We all know we’re in a bad economy. Let’s not beat that dead   horse. Instead, let’s take a look at how your marketing is reacting to the economy. 

First, the franchisee. There you are with your life savings invested into a franchise. Bills are piling up and customers aren’t flowing in like they were 18 months ago. Should you really be investing in a marketing program right now?
  
How about the franchisor? Sales in the system are way down overall, which means the national advertising fund is really slim. Even worse, if you’re a newer franchise and don’t have an advertising fund yet. The franchisees are demanding marketing help and you’re coming up dry.
  
Either way, you’re struggling to just survive. Then along comes some advertising wise guy who throws a pithy saying at you like, “The best defense is a good offense.” Are you kidding? You already cut your advertising and marketing budget six months ago.  
  
The problem is, the wise guy is right. This usually misquoted saying is attributed to Karl von Clausewitz, a Prussian soldier, considered to be the father of modern military strategy. The actual quote from his book “On War” written in 1832 is more direct and powerful: “The best form of defense is attack.” Simply put, rather than waiting around for things to get better, you must get out there and make it happen. This is true in warfare and it is true in business. Cutting your marketing budget is akin to being in a war and cutting your budget for bullets. 
  
Beat the Odds 
For example, you have an army of 10,000 volunteers to defend your city from an attack of 300,000 hardened   troops. Let’s also assume that all you have are spears and swords, while the bad guys also get cavalry, and archers. It might seem prudent to back off. However, you know that if you don’t attack now, there might not be anything left to defend. What do you do?  
  
This was the case in 490 B.C. when the Persians attacked the fledgling Greek city-states on the plain called Marathon. By all accounts, the battle was over before it began. However, undaunted by the hopelessness of the situation, one general, Miltiades, stepped forward and made a passionate appeal for boldness. He pleaded with Callimachus, head of the Athenian council, “With you it rests, Callimachus, either to bring Athens to slavery, or, by securing her freedom, to be remembered by all future generations. For never since the time that the Athenians became a people were they in so great a danger as now.”
  
In an audacious move, considering the staggering numerical superiority of the Persians, Miltiades ordered his men to form a single line, shoulder to shoulder, in equal width to the Persian horde and then, in an act his enemies thought to be complete madness, he ordered them to attack in a dead run. In the resulting melee, the center section of Greeks gave way but the flanks engulfed the Persians, utterly destroying them. Today, we commemorate this act of achieving victory through the agony of persistent effort in the running event named after the battle of Marathon. Applying the experience to business, there are countless reasons to retreat and stop marketing but only one for boldly pressing forward–success.   
  
Marketing is muscle, not fat 
During down times, too many companies, in an attempt to cut the fat, cut the advertising and marketing budget. But marketing is not fat–it’s muscle. It is the very thing that companies need the most when sales start to slide. If your body were dying because of lack of nutrition, would you cut off the supply of food? Yet this is exactly what many companies do. They cut off their supply of customers by stopping or severely cutting back their marketing efforts.
  
If you significantly weaken your marketing muscle, your business risks going into a downward spiral. You reduce your advertising which reduces your customer count which results in even fewer sales. So, you cut back even further on your advertising. Down and down it goes. Simple logic tells you that if your sales are down, you need to increase sales and no company has increased its sales by decreasing its marketing. It simply doesn’t work.
  
This too shall pass 
Just as good times never last, neither do bad times. It’s critical to constantly remind yourself that all business is cyclical and “This too shall pass.” The key is to not   panic and, instead, to keep pressing forward. Just as financial advisors stress that now is not the time to cash out your 401(k), it’s also not the time to cash out your marketing plan to use the funds elsewhere. Sure, you may need to re-evaluate your expenses and be frugal, but be careful not to starve your sales flow.
  
One of the most insidious results of cutting an ad budget is the delayed effect. Cutting the budget right now may not cause an immediate adverse reaction. It may even make the bottom line look great for a quarter or two. But then it comes time to “pay the piper.” By eliminating the muscle that builds brand awareness or sales leads in the pipeline, you will ultimately feel the pain. It may not be today or tomorrow, but eventually it will catch up with you.  
  
Be the one that comes out ahead 
What will be your company’s market position when this economy finally turns around? Those companies that stay the course will ultimately win the battle. While the competition is cutting back, it’s a very wonderful strategic opportunity to gain market share. Here’s a good example:
  
Prior to the Great Depression, the National Cash Register Company had become a behemoth. In 1925, NCR went public and issued $55 million in stock, which at that time was the largest public offering in U.S. history. But the pressure of the Great Depression took its toll. Sales and earnings plummeted and within four years, the company had cut the number of its employees in half. By 1931, it was almost bankrupt.
  
In the meantime, a small upstart, originally called Computing Tabulating Recording Corp., which manufactured punch-card data processing equipment and scales, started to put on the steam. Despite   the crippled economy, it continued to advertise, introduce new products and exercise a strong marketing campaign. This aggressive stance was a key factor in this company securing a major government contract to maintain employment data for 26 million people. By 1940, this rapidlygrowing company had surpassed NCR in sales. Today we know this upstart as IBM. Their tenacity in tough times eventually earned them the position of one of the largest and strongest companies and brands in the world.  
  
What to do 
The reality is when budgets have to be reduced because revenue has fallen off, marketing and advertising will necessarily be affected. So, how do you cut without significantly harming the brand or the sales flow? Here are a few time-proven suggestions:

   • Make sure your message is on target. Now, more than ever, you can’t afford to spend money on messages that aren’t aimed with pinpoint precision. At my agency we call it the “Shiny Object.” Simply put, you need to find the characteristics of your product or service that naturally attracts your customers. Don’t spend the time, money and effort trying to convince your customers based on what you have to sell. Instead look at how to attract them based on what they want to buy.  

   • Don’t cut all programs universally. The worst approach is to cut all budgets X percent. What you end up with is a lot of weakened programs. It’s far better to eliminate specific programs altogether to leave the rest of the programs in tact.

   • Focus on specific markets rather than shot-gunning. If you no longer have the budget to spread your marketing program across multiple segments, focus on a few areas that promise the largest return on investment.

   • Dig deeper into your current customer base. It’s often been said that your best new customers are your current customers. It is usually easier to find ways to get more out of the customers you already have than it is to go out and get new customers. Some studies suggest that it costs five to eight times more to bring in fresh faces than to keep the current ones smiling.

   • “New” doesn’t necessarily equal success. Too often, many people think that just because something is a new approach it’s got to be better. Social media, for example, is on everyone’s radar and has proven to be phenomenally successful. However, as all marketing techniques, social media succeeds when founded on time-proven fundament–base your strategy on a solid approach, get your message right, use creative ideas to break through the clutter, and be consistent. Nothing works well if you try it once and quit. It takes a continuous effort to be successful. In most cases, it is advisable to bring in a professional that   thoroughly understands these new techniques to make them work for you. If you have a few ancillary dollars to try them out, then give it go. Otherwise, when you have very limited funds, it’s better to invest them in methods that have a proven track record.  

   • Try something new. Wait a minute you ask. Didn’t you just say stick with the proven track record? Yes, but not at the risk of turning down a great opportunity. There is a well-known cartoon in which a medieval knight is in the heat of battle and looking over his maps, trying to figure out his next move while another knight is trying to get his attention. The bubble reads, “Not now! I don’t have time to talk to a salesman! I’m   in the middle of a war!” Behind him stands the salesman with his product at his side–a machine gun. While you should be cautious when delving into experimental methods during tough times, you also need to be open to new ideas that can be proven to make your marketing more efficient and effective.

   • Track everything you do. When money is tight, you need to spend it where you get your best results. The only way to do that is to track the effectiveness of your programs. In essence measure everything. No sacred cows. And what doesn’t produce takes a back seat to what does. Whether it be Web analytics, readership studies or lead tracking systems, keep a close eye on the results.  

   • Take advantage of a strong publicrelations program–and no, PR isn’t free. At least a good one isn’t. Plus, it takes a lot of effort to keep it going, but hang in there. A good PR program can reap huge results. But a big warning here. If you’re not really skilled in writing press releases, don’t try it yourself. Hire a professional. A good PR pro knows exactly what to say and how to say it to get traction for your press release.

Advance or retreat. There are certainly times when it is sensible to pull back and regroup. But remember: while one army is retreating, another is advancing. And the battle is never won by the army that is retreating. So, strap on that branding armor, sharpen your budget, refocus your strategy and plow forward.  

 David LaBonte is president and partner of AdMatrix, an Orange County, Calif.-based marketing and advertising agency. He recently authored the book “Shiny Object Marketing,” published by John Wiley and Sons. He also conducts Shiny Objects Marketing Workshops to help companies of all sizes implement the concept presented in his book. He can be reached at 714-769-1521 or  dlabonte@admatrix.net  .