It feels terrible writing this article when a pandemic is underway, and lots of Australian businesses are about to go under. But I know that many in-house marketers and business owners are also deeply concerned about the personal economic impact that Coronavirus is going to have on the businesses which they are responsible for marketing.
It is no exaggeration to say that in coming weeks we are going to see thousands of previously healthy Australian businesses go under. There will be mass layoffs of 100,000’s of full-time staff as well as millions of shifts evaporating for casual workers in industries like events, arts, hospitality and travel. Whilst we can hope that the public health aspect of COVID-19 gets under control in the coming months, the impact on Australia’s economic health will continue for years.
The above doom and gloom isn’t aimed to shock. But to be real. We are in for a once in a generation challenge and how you respond in the coming weeks and months will shape your business and potentially your career for years.
In 2008 Marcus Sheridan owner of River Pools in Maryland was under severe financial distress as a result of the USA’s worst economic conditions in a generation. Rather than fold like many of his competitors he used digital marketing to scale his business in a declining economy. It worked.
Marcus knew that the demand for new pools in the USA was going to decline but he knew he only needed to grow his very small part of the pie and he would thrive in horrendous business conditions. His team wrote an article ‘How much does a fibreglass pool cost?’. In plain language, River Pools answered their prospects’ number-one question about pools: price. This article was directly responsible for over $2,500,000 of pools sales for River Pools due to customers finding it on Google. This and a broader investment in content, SEO and digital marketing transformed his business.
So what does one blog article written 12 years ago for a small business in the USA have to do with the current panic and fear in the Australian economy? Read on.
At Rocket, we always aim to have 200% the number of inbound enquiries we need in order to grow our business. Having excess requests for new work means we can be selective in the types of clients we onboard, and be somewhat protected in a downturn or quiet month. In the past two weeks, we have seen inbound leads come to a screeching halt and our contact forms being filled out almost exclusively by people seeking jobs.
We have clients asking about what to do with their marketing in such volatile conditions and here is what we are advising them and applying to our own business:
This might be a really hard mindset to take when your business is struggling to survive and/or pressure is being mounted on your marketing budget. But you need to understand that recession and catastrophic economic conditions are the equivalent of Darwinism for businesses. Study after study in the USA after the GFC showed that the strongest and fittest businesses in most verticals thrived on the way out of a recession and the weakest businesses went under during the recession. The weakest businesses cut investment in things like marketing whilst the stronger businesses were able to double down on long term activities. This meant that weak businesses got hit twice, first in the weakening economy and secondly (if they did survive) when they lost ground when the economy picked up. Now is NOT the time to cut all costs and hope to hold on. Rather it is a time to make bold and intelligent decisions that will put you in a better position than your competitors after this inevitably subsides.
Increase Marketing (with caution)
From the Harvard Business Review - “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.”
Many businesses, even in struggling sectors, will need to increase marketing efforts in an attempt to grow, or at last keep their head above water. That said, the use of marketing budgets is going to need to be surgical. Clearly it makes sense for airlines and events businesses to slash spend in direct response channels in coming weeks. No point advertising cheap flights to the USA if no-one is buying. But now is the time to continue to invest in sensible marketing activities. Buy cheap impressions, grow awareness and take greater market share.
That Said, Don’t Be STUPID With Your Media Budgets
Watch your demand generation/acquisition budgets like a hawk in the coming two to four weeks. As an agency owner, my interests are in having clients keep spending media at the same or increased rates. But this will be insanity in many verticals. In some verticals, the search volume will dry up. If this is the case, as long as CPAs are consistent you don’t need to change budgets, eg you are at the mercy of intent so budget won’t be wasted. But in other verticals we expect a rash of competitors to activate short-term channels like Google Ads and Facebook Ads which will likely blow out CPA’s for existing advertisers. You will need to be doubly diligent (or have your agency) look at campaigns performing within the target range and those outside. Things will change quickly, don’t wait months to review performance. Have calm and rational discussions with internal stakeholders about potentially resetting acceptable marketing KPI’s and targets. Increased competition for market share should mean less aggressive targets.
Be Like Marcus, Your Competitors Won't
As I outlined at the top of this piece Marcus decided to market his way out of his slump by taking a long-term approach to marketing. It is a central theme to the advice we are offering to clients and performing ourselves when it comes to the coming months… If the demand for your services drops in the coming months, chances are that they will be close to previous levels within a year. Do not waste this opportunity to best position your business for when circumstances change. Many businesses will blink during this crisis and cut investment in long-term activities. Hold course and keep investing. Given the short-term outlook of competitors, you will actually be in a better position than you would otherwise in 12-18 months’ time. You will thank me for taking this advice in 18 months’ time
Re-Direct Resources and Knock Over Those Lingering Projects
Each of us will have different challenges in our businesses. Some of us will likely have excess capacity open-up, some of us will be scrambling to keep things together. But now is the time to direct excess resources into long-term valuable projects that have been neglected in good times in terms of the sales and marketing departments (where we work).
This means things like; implement that new CRM, fix that database project, have your sales team finalise that sales playbook, have the marketing team finally get sign-off on the email marketing workflows which have been delayed since 2018. Your industry will start to grow again, it might be a month it might be 14 months. But when it does be in a position to take more market share than you previously took. Don’t look back at this time as when you panicked, cut-deep and set the business back two years.
Be Armed To Share This Sentiment
If you believe that marketing budgets are going to be cut which are to the long-term detriment of your business here are some thoughtful and sensible posts to share into your C-Suite:
Tough times are ahead. I understand that some businesses will be in such a crisis that the points above might not be practical.
That said - if you can, now is the time to take bold and courageous decisions. In five years’ time, you will look back and say these were the best ones you ever took.
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