Getting Back On Track

Recently, I attended an executive dinner at Putnam Investments. The presentation topic
was a discussion about what is on everyone’s mind. Will the market come back? What
are the right moves to make in the interim? The presentation gave some great statistics
that put the current market environment into perspective. As I listened, I was struck by
the fact that financial investment and the norms that go with it are very similar to the
marketing investments that companies make in growing their business.

Current Reactionary Scenario:

  • Financial – Stock market is down, buyers moving to bonds, focus on safety
  • Business – Revenues are down, buyers reducing marketing expenses, focus on sales

Recommended Long-Term Scenario:

  • Financial – Great time to buy stock at sale prices, continue to invest for the turnaround
  • Business – Increase marketing during slow periods to spur growth when market shifts

The adage, “What goes up, must come down” also works in reverse. After a downturn,
the next direction has to be up. The question for both the financial and business
community is: when is the right time to start re-investing? The possibility of missing
the full results of an upturn is real. Returns in both arenas means being ready when the
shift occurs, not playing catch up after the shift happens. Most of us are not able to
know when that magic moment happens in the financial markets. So if we played it
safe during the downturn, we will definitely get less return in an up market because it
will take us time to move.

The same can be said about marketing. While the business environment of the past 5
years has taught us, and reinforced, a new level of impatience, the reality is that
marketing is an investment that does not have immediate returns. It requires time and
focus to build up to the point at which the market responds. A classic financial norm
that struck me as being the most applicable for both is:

The shorter the time invested, the greater the risk.

Missing the financial market’s best day will reduce your return. Missed by 30 days
results in an average return of – 2.69%. Staying in results in an average return of 9.35%.

Let’s apply that to the markets your company sells in. Missing the best days of your
business’ market will also reduce your returns. A good, targeted, strong marketing
campaign can take up to 3 – 6 months to really hit your market. Marketing is about
repetition of the right messages to the right people. Your prospects have to hear the
message over and over. By being silent during the down turn, you are automatically
pushing out by several months’ revenues that could have been yours when the market
conditions improved. Marketing is not just for the best of times; it is an investment for
the worst of times. Putting aside for a moment the knee-jerk reaction to cut costs when
sales are down, does it make logical sense to reduce or cut marketing when business is

So, how to get back on track? Well, financial advisors tell us:

  • Diversify for better risk-adjusted terms
  • Consider additional investments
  • Re-balance to stay on track

All of these make sense as we look at the marketing investments your company needs
to be making. Diversify your marketing dollars among a variety of methods. Try some
new things rather than depending on your standard marketing mix. What market
segments show the most promise – consider investing more in those areas. Review and
re-balance where your marketing dollars are spent. Is advertising a wise investment in
this economy? What about lead generation activities that are more direct?

To make it through this tough time, we need to adjust our desire for an absolute return
to be able to focus on a relative return. And here is another simple truth – everyone else
is hunkered down and reducing his or her marketing spends. What would happen if
your company’s voice actually stood out in a quieter market?

— Lisa D. Dennis
© Knowledgence Associates, 2003 / All Rights Reserved

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