Get Your Budget Back

Quote of the Day

Friday, March 13th, 2009

“It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share, and return on investment at lower cost than during good economic times.”

-John A. Quelch, Harvard Business School professor

You Ask, We Answer

Wednesday, March 11th, 2009

Q:

Boutiques really do seem like a more economical business model. Not only do they have all the benefits listed, but it also seems like there is less start up cost. This in turn makes it less expensive for them to get started during an economic crisis. However is there ever a point in time where the market can become over saturated with too many boutiques? At what point do these boutiques begin to get bought out by larger companies?  -Chris, Wichita

A:

Great question. We think that the boutique industry regulates itself in that weaker companies are weeded out during difficult economic times. As for being bought out, we have no desire to become the biggest video production company. We simply strive to be the best, no matter our size. Our goal is service to our clients, above all. We look at it as 50% product, 50% customer service and have no interest in growing huge or being bought. Thanks for the comment! -Intake Studio
 

Ian from Springfield, Missouri made some excellent points in his comment on IntakeStudio.com:

Smaller can be better, especially in a hard hit economy. Everyone is thinking about saving the environment, their checkbooks, and keeping their downtowns alive. Small locally owned businesses can contribute to all three. They provide variety and a uniqueness that can’t be found in other towns. They typically keep the money within the community, thus expanding the local economy and boosting everyones bank accounts. They help the environment by not having to ship large amounts of product across oceans or strip large swaths of resources. Ideally local businesses would work together to share resources and production.
 

We appreciate the participation. Leave a comment or shoot us an e-mail with a question of your own.

What Small Ad Agencies Should Do During a Recession

Wednesday, March 11th, 2009

This recessionary period is when small agencies maximize their opportunities during lean times to gain ground.
 

• Keep what you have while getting someone else’s. Advertisers aren’t just trimming budgets; they are re-evaluating their relationships to determine if they are getting the most for their money.
• Great agencies shine brightest during dark times. When times are bad, there is better talent available to small agencies. Due to layoffs or the fear of them, good talent can be open to working for an up-and-coming agency.
• Work hard even when there isn’t a lot of work going on. Staying busy is the key to getting out of the gate fast when the economy rebounds. Good employees expect to be challenged. 
• Focus on marketing tactics where success can be measured and defined. Marketing directors are running scared (or are likely to be eventually), and in that scenario that want to minimize risk and waste. The inherent measurability and relatively low cost of digital tactics are more attractive to clients when the economy is less robust, and digital will be the one area of the business that will grow this year.
   

Agencies will have much more success acquiring new business if they diligently pursue their new business goals despite the economic conditions.

Originally posted on fuelingnewbusiness.com

Ad Talent May Head Elsewhere

Friday, March 6th, 2009

As ad jobs dry up some executives may leave the industry or even the country.

Where will the talent go as advertising agencies lay off staff by the hundreds?

Some may find homes at smaller independent agencies with greater cost flexibility, some may establish their own boutique shops or some may leave the U.S. entirely for foreign markets where the demand for advertising is holding up a little better. Others, however, are looking beyond agencies to client-side opportunities, particularly at Web-based companies hungry for content and the talent to produce it.

“The businesses are all about content,” said Gary Stolkin, global CEO of The Talent Business, a global headhunter that places senior-level creatives, managers and strategic planners, which has offices in New York, London, Singapore, Shanghai and Sao Paulo. “If you are producing content at an ad agency, there are lots of other businesses that will be interested in you.”

And as agencies, particularly those within public holding companies, increasingly focus on cutting costs, recruiters will continue to adapt and consider new avenues for placing talent, particularly as the recession roars on.

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Do More with Less, Part 2

Wednesday, March 4th, 2009

Part 1 was posted last week and can be found here.

International advertising agency Oglivy offers 7 points of advice based on their experience in guiding brands through previous recessions, mixed with some of the latest academic thinking. 

Here are the last 4:

4. Cut Strategically within a Brand Portfolio 

If you have to cut spending, some cuts are better than others. Generally, you should cut the budget for smaller brands rather than for bigger brands. Small brands often take a disproportionate share of marketing spend because they are trying to grow, but bigger brands are likely to deliver bigger returns in the short term. 

You should also exploit seasonality to make cuts in off-peak sales periods. The sales losses will be lower. This is also the time to take a hard look at the contribution of different brands to profit as well as at their growth potential. Prune your product lines. Drop support for stagnant brands. 

5. Use Price Promotions Sparingly 

In a recession, marketers are under tremendous pressure to offer price promotions (such as temporary price cuts, premiums, couponing, BOGOFs, etc.). These are the easiest part of a marketing program to measure, and therefore the easiest to justify when budgets are tight, but they can truly damage long-term profitability. You need to work out the right balance between promotion and stimulating primary demand in your particular case. 

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