Solar Velocity

Why You Should Increase Marketing in a Down Economy

Solar Velocity, an Atlanta-based Interactive Marketing and Design Firm named as the "2008 Innovative Small Business of the Year" by the Atlanta Journal-Constitution discusses the reasons to market in a recession.

Atlanta, GA, July 25, 2009 --( In a world of hiring freezes, cut projects and cut budgets, low production, and shrinking incomes, why would anyone spend money for marketing? Although it probably seems like any easy answer, there may be more to this question than easy answers. And in fact, history would steadily say that now is one of the best times to increase your efforts in marketing.

CEO Jason Swenk of Solar Velocity, explains the tension this way, “It is hard to hear conversations, if you are in a noisy room of people talking. But, if no one is speaking, a whisper can be heard loud and clear. If your competition is not advertising your marketing dollars will go much further than you expect.”

For some businesses who are embracing this philosophy, the results seem to be speaking for themselves.

General Mills’ finished this past fiscal year with revenues up 8%, that is $14.7 billion dollars. And according to Business Week, “In its most recent quarter, the company spent 16% more on marketing than it did in '08.” Analyst Robert B. Moscow, who watched the company have 9-10% revenue growth in categories growing at 5%, attributes the movement to the company’s new creative marketing. General Mills’ Chief Marketing Officer Mark Addicks explains the growth this way, “Brands that continue to expand [and] give hope and optimism [during rough patches] historically do well.”

And history does seem to support Addicks’ statement:

“McGraw-Hill Research in a study of U.S. recessions showed that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn’t keep up their advertising.”

The car maker Volkswagen raised its ad spending 45.7% in 2008. Consequently, its U.S. market share moved from 1.4% to 1.9% from the end of 2008 to April 2009. In a USA Today article in May 2009, Tim Ellis, U.S. VP of Marketing at Volkswagen, said, “When we invest in marketing, things happen. We think it’s important to stick to our roots and stick to our value message. We’re getting a higher percentage of the dwindling marketplace. And when this crazy situation comes straight side up again, we’ll be positioned to increase our share even further.”

How are companies actually positioning themselves in the market? Many are working online. The Internet has opened the door for more engaging avenues of customer communication. Here’s a few ways any company can innovatively use the Internet during this time:

1. Strengthen Social Marketing—Turn your customers into your greatest advocate. Used properly, social marketing has the ability to amplify the conversation surrounding your brand like no marketing tool before it.
2. Look at Search Marketing— Search Engines are vastly becoming the means by which people find goods and services they need.
3. Invest in Email Marketing— To be effective, email marketing has to communicate and not annoy its way into inboxes. Your clients want to hear from you, so communicate with them.

Although the economy is walking a little slower these days, don’t let its pace hinder your energy. Now might be the very time to lay the foundation for some great movement for the months and years ahead. And while history would explain that spending for marketing does bring increase in revenue, let’s make sure we don’t throw the money at just anything. Strategy might enter the conversation with a voice reminding us to research an effective plan created for the business. Each marketing strategy needs to be a case-by-case development in order for history to be proven true again.

Solar Velocity LLC
Meredith Burns