Duct Tape Marketing

There is no arguing that we are facing a down turn in our economy, I’m not ready to call it a recession yet, but we are definitely feeling the pinch. That is the nature of business-it goes in cycles of ups and downs.

When the market slows and sales start to drop, owners’ first instinct is to cut their costs. One of the first to be slashed is the marketing/advertising budget. Ad budgets are often at the top of a cost-conscious small business owner’s hit list because it’s an easy decision to make and it has an immediate impact to the bottom line.

This is a grave mistake. Smart business owners know this is the time to spend more!

Let me explain. When the economy shrinks it tends to shrink as a whole, meaning that people are still buying there are just less of them; the pie has shrunk. If you currently own say, 3% of your market and if the total market is $300m then your sales are $9m.

During a slow down let’s say that the market potential has shrunk by 50% to $150M, assuming you are continuing to do the same income producing activities (marketing, sales, promotions ect) your sales should be $4.5M. I know, as an owner that is scary because your sales on that marketing budget has gone way down and your instinct is to cut budgets, sit back and “wait for it to turn”.

What you do at times like this really depends on how you view marketing. Is your marketing viewed as an expense- something you just have to do? Or do you view it as an investment?

Smart marketers know that while all the competition is standing on the sidelines, if they have the audacity to actually spend more (invest), they will capture more of the market share(because competition is waiting) and when the markets turns around they will reap the huge benefits because they have a greater market share and the pie is now bigger.

So in our above example if you were to get just 2% more market share, which would be 5%. When the economy recovers and the market value goes from $150MM to $300MM your sales would grow and now be $15M.

When is the best time to buy in real estate? When the market is down. When is the best time buy stocks? When the market is down. The same principle holds true for small business marketing.

Have courage and think strategically. Up your marketing spend in this down market. Invest in the longer term growth of your company.

Look, I don’t really think that the mySpaces and Facebooks of the world are that important for the typical small business as they stand today. There may be very practical business reasons for some to actually use these and other, what are called social networks, for business gain, but most people that have jumped on the social network bandwagon have found themselves left with a “is this all there is” kind of feeling.