Recession and Marketing Budgets

If the company you work for, wants to lay marketing staff off, or cut marketing budget (right as you are in the middle of implementing blogging and wikis and Facebook uber stuff), tell ’em no.

1. Research the customer. Instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the recession. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less. Must-have features of yesterday are today’s can-live-withouts. Trusted brands are especially valued and they can still launch new products successfully, but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent. (Harvard Business School)

… and Robert Scoble (Scobleizer on Twitter) was misled when he sided with Seesmic in laying off the PR and Marketing staff

The well funded layoff

Today Seesmic laid off seven staff members, after laying off three other members a couple of weeks ago.

They have millions of dollars in the bank and are well funded. Why would they do that?…

They are telling him that the downturn will be deep and will be multi quarter. They told him it was a good idea to conserve cash and bunker down.

Translation: Le Meur isn’t the only one getting this advice. Sequoia Capital told its companies the same thing.

Well, Le Meur told me he just cut jobs that aren’t core to the mission of Seesmic. Designers. Marketers. PR. He told me all those functions are outsourceable and aren’t core to what they do. The folks sitting around the table were developers, people who kept servers running, who were directly responsible for keeping customers happy.

I do so wish that bloggers with no experience running companies would not offer business advice. But that ain’t never gonna happen. And I wish that companies that manage online communities are clear on the value of those that bring in the online community members. But that won’t happen until after the crash.

Every advice I have ever seen – success stories from the Great Depression, Post War Boom – the CEO said that they expanded during the hard times and contracted during good times. Why are Seesmic advisors givin them the opposite advice?

Anyway, back to my original point: If you are implementing social media marketing, and the company starts backpedaling, quote the Harvard Business School. I’m working with a huge global corporation at the moment and they are going hell bent for leather. Probably gonna purchase up little companies big time, in the next couple of months/years. No reason for little companies not expand also. Only the faint hearted will pull their head in, the perfect time for growth.

By the way, jobs during the recession will come from who you know. So will deals. Your spare time will be spent in low cost entertainment where you get the support of your peers and community. If you are invested in social networks, time to expand. Do you hear what I am saying?

Laurel Papworth

Named by Forbes™ Magazine in the Top 50 Social Media Influencers globally, named Head of Industry, Social Media (Marketing Magazine™) and in the Power150 Media bloggers (AdAge™). CERT IV Training and Assessment certified trainer (Diplomas and Certificates etc) Adult Education. Laurel has manager Facebook Pages for Junior Masterchef, Idol, Big Brother etc. and have consulted on private online communities for banks Westpac, not for profits UNHCR & governments in SE Asia. Lecturer, social media, University of Sydney for 10 years and Laurel has 11,000 online students. Laurel Papworth personally connects to 6 million followers online and has taught around 100,000 people in the last 10 years how to be social media managers.

6 thoughts on “Recession and Marketing Budgets

  1. A great post Laurel, and I couldn’t agree more.

    The Sequoia presentation had some interesting facts but their conclusions were depressing and wrong-headed…so if we all lay off as many people as possible and don’t spend any more money – how is that going to help us?

    Sadly the Sequoia advice is, as you allude to, orthodoxy. More fool to anyone who follows it to the letter, as they’ll learn the hard way.

  2. Laurel – great post. And working in research I love Quelch’s first point about research budgets!! And completely agree with both you Dirk – The Sequoia “advice” is the same advice followed by most back in 1929 – tighten belts, cut spending, cut staff, which has been shown to only prolong events like the Depression. Hopefully some of us have learnt something from history… heard similar sentiments from an economic commentator on ABC radio last night who said that (apart from the terrible situation with people’s super / mortgages / investments) this period is actually thrilling for him, as governments from around the world have appeared to have taken harsh lessons learnt from 1929 and putting a different response into action. He said you often don’t realise you are in the middle of “history” as it happens, but these past two weeks and government response will be defining in how we emerge from this crisis. What will be interesting is how businesses act in the coming months.

  3. Laurel – I agree that marketing budgets need to be protected in tough times to ensure the brand / consumer is insulated for future growth.

    The reality though in big business's is the 2 major cost lines are marketing and people. So in tuff consumer times like these when top line revenue starts to decline – the 'bean counters' naturally look to marketing & people – and with people being the absolute last resort, it's the marketers that have to put their armor on and go into battle. It then usually comes down to the guaranteed ROI.

    It's never an easy conversation between CFO's who don't understand the fundamental's of marketing & CMO's!

  4. Laurel. Absolutely!

    I was reading about the -umm – ‘situation’ today in Time Magazine: http://xrl.us/otxp2, so this post is particularly germane.

    John Quelsh is right:
    “…You need to know more than ever how consumers are redefining value and responding to the recession”.

    In many cases, this kind of understanding will be key to brand survival.

  5. Excellent post Laurel. All through a long working life we’d always expand our sales resources when times were tough. While it’s tougher getting new business across the line when businesses are conserving cash etc, there also tends to be a reduction in competition as marginal businesses fail or downsize.

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