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Last week 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 slowing?

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

  n      Diversify for better risk-adjusted terms

n       Consider additional investments

n       Rebalance 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.  Re-look and rebalance 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?

 By Lisa D. Dennis

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