Marketers often complain that marketing gets unfairly punished in tough business or economic times. “Now more than ever is the time to invest in marketing, and keep sales up!” is the usual refrain. Whether or not this makes any sense, though, depends on whether you see marketing as a support function or as a generating function.
Actually, let me back up a sec and let you know what I mean by the term marketing, at least for the purposes of this blog. This word has a surprisingly broad application around the world and even around the block. What I mean by “marketing,” in this blog at least, is those aspects of selling that do not involve account work, i.e., the development of sales relationships. (More on this some other time.)
Anyway, the Internet particularly has severely altered how this function plays itself out. Prior to the rise of the Internet, the only non-account sales work was essentially mass communication—messages being distributed unchanged to hundreds, thousands, millions of potential buyers. Marketing was and is still generally seen as supplemental to the rest of sales (the account work) because without marketing, you could still imagine account work going on.
Let’s say you were a packaged-goods company in 1990, the beginning of the Bush I recession. Marketing creates your public ads (outdoor, TV, wherever), gets your products placed in movies and on shows, creates in-store displays, puts on publicity events—and also supports your salespeople by providing them with information sheets, brochures, presentations, etc. they can show distributors in order to develop sales. Well, everyone loves all the ads, placements, and so forth, but they only contribute to revenue in a kind of amorphous, tough-to-measure way; if you suddenly are looking at a drop of 30% in sales because of the rough economy, it’s easy to say to imagine doing without them. As long as you have in-store displays and your salespeople are armed with materials, you can get your product on the shelves and sold.
Thus for you, packaged-goods company circa 1988, marketing is pretty much a support function. It was difficult (if not impossible) to quantify the return on your, say, $10 million investment in advertising. Did this create $20 or $200 million in additional sales? Who knows? There were metrics to collect and research you could do—Dell Computer mastered this in the 1990’s to reach its dominant position of today—but in the end there was always a little horse-sense and faith that went into understanding the return on a marketing investment.
This is still true to a greater degree than anyone will admit. But the Internet has created so many ways for marketing actually to generate revenue directly, that it can actually become a bedrock company investment that can’t be cut. Or more accurately, parts of marketing can become so.
This was foreshadowed by the catalog companies before the Internet came along. In a recession they still mailed catalogs, because if they didn’t they gave no one any reason to buy. What are you going to do if you need new shirts, check your bookshelf for last year’s Land’s End catalog? No, you expect one in the mail or find a recent one in your catalog pile.
Today there are hundreds of electronic avenues supplementing the SCRW ways that marketing leads directly to revenue. E-mail, SEM, Web promotions, banner ads, and so forth all can put people on the path to buying, and using these programs the marketer can say, “In the fourth quarter we spent $2.00 per member acquisition, and made an average of $10.00 revenue from all members and $4.00 from new members.” In this scenario, in a downturn, marketing may say that reducing the marketing budget is equivalent to reducing gross profits.
This isn’t a perfect argument because if there are less sales to be had out there, you can’t keep your marketing investment level the same unless you’re taking advantage of the weakness of rivals to gain market share (which has nothing to do with a recession). But can you see how, once marketing can be cast as a “generating” instead of a “support” function, its essential role even in a downturn becomes obvious?
