I think it’s irresponsible, to be honest.
The whole of the marketing communications industry keeps telling clients that they must maintain their spend on brand-building, even in a downturn.
The deeply dull volumes of Ogilvy on Recession employ some truly Neanderthal arguments to support the case. For example:
“In the 1974-5 US recession, Ford cut adspend by 14%. Chevrolet, however, ….increased its adspend. Chevrolet’s market share rose by 2% points, while Ford lost share and took years to regain its previous position.”
Well, if I was Rick Wagoner, this argument would undoubtedly have persuaded me to maintain my advertising expenditure at all costs, right up until the precise moment I was fired.
In Singapore, the communications industry proves its case with astounding naiveté in a TV spot that keeps popping up in the middle of every recession. Apparently, if you stop bouncing a ball up and down with your hand, it eventually stops bouncing completely. Just like if you cut your brand advertising budget, in fact.
Wow – that should make Citibank think twice about cutbacks right now!
This kind of advice is not just irresponsible – it’s pathetic. In fact, it’s likely to do our industry much more harm than good. Because it shows that we don’t understand the profound dynamics that our clients are facing. And it proves that we’ll say whatever we need to say to make a buck.
Because this is the truth:
There has never been a recession like this one. Ever.
The problem is cash.
For years, companies have built businesses on the basis that they’ll grow faster if they exploit their cash balance than if they keep it.
Now they’ve found themselves in a cash squeeze. Banks aren’t lending. Creditors aren’t paying. Sales are declining. Cash is disappearing. Companies can’t pay their debtors, can’t pay their staff and can’t pay to keep going.
So some of the world’s largest companies are going bust. Thousands of Asia’s SMEs have disappeared. And millions of their staff have lost their jobs.
Meanwhile, our little industry is still using arguments from the 1970’s to try and persuade companies to spend what cash they have left - on brand-building.
Dear oh dear oh dear…..
If you had a choice right now between brand-building or bankruptcy, which would you choose?
This entry was posted on Thursday, April 23rd, 2009 at 12:22 pm and is filed under Uncategorized. You can leave a response, or trackback from your own site.
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April 23rd, 2009 at 2:44 pm
Agencies may want to reassure their clients when discussing cut-backs; that it is all relative to their competition. If everyone is cutting, they still have the chance to maintain a comparable visibility and engagement with their consumer. Sure, Private labels may do better and gain some ground, but competitive presences is also lessening and what better time to get smarter with their dollar and cut through the usual clutter. Better to encourage and utilize new media, smart ideas (creative) on a smaller budget, than non at all!!
April 23rd, 2009 at 4:00 pm
This might help;
http://www.marketingprofs.com/9/think-ahead-while-cutting-back-recession-marketing-priorities-lapointe-reibstein.asp?adref=NmdW349
April 23rd, 2009 at 6:08 pm
Well, it sounds like ‘brand-ruptcy’ to me, unless one has unpredictable (trained) agency talent working with brave and unpredictable client counterparts… now, where does one find that
April 23rd, 2009 at 7:54 pm
Hello again
The answer seems to flow from your last two posts. Agencies that are sitting around waiting for briefs in these difficult times (you know who you are) deserve to have their budgets cut, and are mostly responsible for the ‘agencies are dying’ hysteria. Perhaps those ones are. It’s a good thing.
Media companies will steal business doing obvious ads in obvious spaces. Ad agencies have been raking in money doing that for a long time. Good times! Now there’s more competition for the easy money.
Clients need help in cutting their budgets, whilst doing the best they can in a crap time. They need good business planning and genuine partnerships with their consultants/ vendors/ agencies/ motdejour. Perhaps its some media relations work, or (heaven forbid) encouraging more response from the ads they are allowed to continue with. Internal marketing. T’internet.
Back to linking pay with performance (and yes it’s hard but when else will you try it) that gesture goes much further than the Ogilvy recession book tactic. Oooo it worked for Chevrolet. 80 years ago. Prime cockage.
Giving the Client a very smart person to work with, who can then identify and marshal the appropriate partners would be a good thing. The fixed cost is the smart guy. The partners could be yours, or you could get someone else to pay for their salaries until they’re used, and take a margin.
Compared to what Clients are used to paying for it’s nothing. Start charging for the regular agency team people on a per use basis rather than a retainer (if that’s the case). And be that smart person before the freaking media rep tries to be him or her. For free.
April 28th, 2009 at 10:36 am
Agreed, cutting budgets is a must for many companies. How much, where to allocate, and what messages to put out there are the wild card questions that each company needs to answer individually.
However, summarising your post with “the choice between brand-building and bankruptcy” proposes a rather extreme either/or scenario which isn’t the case for all companies. Nevertheless, to answer the question, for most of my clients, I would choose brand-building, because to ignore your brand and let it fail, in this very singular recession, is simply a way to delay bankruptcy. Many companies simply don’t have the brand presence or loyalists to weather this storm with greatly diminished messaging.
April 28th, 2009 at 11:22 pm
“Brand building” as an expression tends to conjure up images of mass scale force feeding of influence via intrusive live television, in-your-face OOH, and mind-bending copy and visual twists on print media.
Which we all know today is never the case. Price cuts is just as potent a ‘brand building’ tool as anything else i.e. great value for money.
Bad semantics, can lead the mind to do naughty and ineffective things, and the client to panic in horror of the expense (or risk being called “cheap”, “conservative” or “___” behind their backs) …
The day all agencies cross the BB word out forever, and substitute it with something more immediately productive like “Demand building, generation, stimulus etc etc” …