Posts Tagged ‘economy


Online Marketing ROI plus Economic Instability equals Good Times.

In an article a couple of days back in the Sydney Morning Herald, we read about Credite Suisse’s analyst Finola Burke forecasting a 2.4% drop in advertising spend in the coming year. In the same article, we saw Fairfax media have just cut 550 jobs in the wake of anticipated revenue losses on the back of economic slowdown. Whilst the past 4-5 years have seen massive shifts away from traditional media’s and to online advertising, this is the first analyst I’ve seen who has forecast all-round reduction in spending as a result of looming recession and economic turmoil. Does this in turn mean we (i.e. Aussie online marketers) might be cowering waiting for the axe to drop on our jobs?

Not yet. Australia is yet to be stung by the credit crunch in the same way the United States (and now Europe) are currently being, and generally our financial markets have been better regulated (yay ASIC and APRA!) and are therefore (for the time being) less likely to suffer the large scale disaster seen in the US (ripple effects are inevitable though). Same situation for alot of Asian countries, who all remember how darn hard they hit the skids in 1997 and have been appropriately prudent in their financial activities since. This doesn’t mean the massive clusterf–k mistake our American friends are suffering is not going to hit us. It probably will. And it will hit some of us harder than others:

1 Consumer spending on High Involvement goods will slow down. Retail forecasts for the coming holiday season in Christmas look grim for the US at least, which is to be expected. Typically, in hard economic times, sales of big tickets items such as houses, new computers, new cars, airline tickets etc are hit the hardest. So potentially, companies in the struggling Aussie automotive, airline and manufacturing industries will be putting the squeeze on their marketing department to tighten the belt and knuckle down.

2 Financing for growth will be harder to come by. Credit will cost more if it is in high demand and low supply – basic rules of any market. With some of the biggest banks in the world being US banks, we will inevitably feels some pain here. Even if their revenue doesn’t take a hit through all this, a company will still have fewer opportunities to expand due to difficulties in securing credit (again, we’re yet to see this in Australia, and if the Reserve Bank keep cutting interest rates, I could have egg on my face here). This means companies will look to other sources of funding growth initiatives (and perhaps to meet their debts) – internal sources. We all know marketing and media spend are often one of the first things cut during serious financial strife.

3 Companies will revert to their core competencies. Peripheral parts of a business will begin to be stripped back, as CEO’s begin to take action to free themselves of blame if the credit crunch begins hitting Australian companies harder. They cannot be begrudged for this, as they have a job to do aswell. Despite marketers assuring companies otherwise, marketing is probably considered by most companies a peripheral part of their business – the value it adds is not necessarily viewed as the same value delivering their product and/or service adds. So again, marketers may see the chop.

So why, then, has it never been a better time to be in e-marketing? Because e-marketing, done well, provides the best ROI a company could hope for. E-marketing (or digital marketing or online marketing or whatever the heck else you want to call it) is the most track-able form of direct marketing, which financial decision makers love because they can see a direct relationship between spending X and making X^y profit (where y is hopefully greater than 1). What this will mean is that as companies in Australia inevitably tighten their belts worrying about what ripple effects the US economic crisis will have, E-marketers will (read should) be the final ones to be effected as our activities are the ones most able to show the CEO, CFO, board etc. value added. Furthermore, this might mean that companies shift even more of their marketing spend away from traditional, harder to track marketing activities and into e-marketing which shows stronger provable ROI. Whilst not wanting to dance on the potential graves of other types of marketing, this economic downturn could see a new vigour and focus on E-marketing from business leaders, and we may be in a new era where e-marketing is finally given the resources and importance that traditional marketing activities have always received.

So go have lunch with your boss and give him the schpiel. And get him to give the schpiel to his boss. And flick your zippos and hold them in the air, e-marketers, because we could be about to see a marked change of the guard from the marketing old school to the new school. There’s always a light at the end of a dark night.


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