Time to Deliver - Why marketing investment is a must during an economic downturn
A Pitney Bowes White Paper: During tough economic times the temptation for many businesses is to sit tight, cut back and wait for the winds of change to blow favourably. In particular, marketing strategies come under intense scrutiny when the pressure to slash costs intensifies. (Free download)
Whilst such caution is understandable, is it the correct course of action? Experience from successful companies that have survived previous financial market depressions suggests not. In fact, the polar opposite is true. As the competition consolidates, so the opportunity for greater market penetration arises.
Why continue to spend on marketing?
An analysis of the Profit Impact of Marketing Strategies (PIMS) database presented at the Institute of Practitioners in Advertising conference in March 2008 found that companies cutting marketing budgets had higher return on capital employed (ROCA) during the recession, but lower during the period of recovery. Conversely, companies that increased expenditure achieved a significantly higher ROCA during the recovery period and gained an additional 1.3% of the market share on average.
There is a clear message here in support of direct marketing, encouraging businesses to be bullish in the face of wider market doubt. The reward of additional market share is significant incentive.
The ‘Mail Moment’
Before embarking on a sustained period of promotion, businesses must be absolutely certain that they are selecting the most effective channel through which to communicate and that their marketing activity is geared towards making every single communication work hard to deliver ROI.
There is still little to rival the technique of direct mail in terms of getting a message out to the broadest reach of people in the most cost-efficient fashion. While there are approximately 15 million prospect email addresses on record in the UK, 44 million postal records are available. In turn, mail targeting remains more effective than online targeting, as postal addresses contain more insight (via postcode and house number) than email addresses.
Direct mail has continued to evolve to become, at its best, a powerful and persuasive vehicle for businesses of every size. Used intelligently and efficiently, postal mail can have a dynamic impact on recipients. The ‘Mail Moment’ - that time of day when households or businesses receive and sort their mail - continues to be anticipated and welcomed.
Maximising the maill
- During tough economic times, direct mail is a more cost-effective way for struggling businesses to boost sales than traditional advertising. Over and above cost considerations, using direct mail has a number of attractive advantages:
- Direct mail can happen quickly – an essential quality in beating the competition to broadcasting new price offers and services.
- Businesses can be flexible in the size and frequency of campaigns that are despatched.
- Offers can be tested amongst selected targets at relatively little cost with those campaigns generating the best response pushed out to a wider audience.
- Mail also grabs the attention of consumers. A study by USPS found that consumers spend an average of 25 minutes reading their direct mail on any given occasion.
- Direct mail is an extremely effective tool for driving traffic to websites – and encouraging purchase. Indeed, in a recent study by Pitney Bowes, 60% of respondents agreed that traditional forms of advertising such as direct mail and display/broadcast advertising are most likely to get them to visit a company’s website and seriously consider a purchase.
- Direct mail results can be more accurately measured than advertising campaigns or other promotional activity. With recession looming, businesses must be able to prove ROI against any spend.
From pain to gain
In testing economic times, the temptation to cease all marketing and to cut short-term costs must be avoided.
A sense of perspective is required. History reveals that a typical recession lasts no longer than eleven months, a manageable period if the correct strategies are adopted. Certainly, eleven months without any marketing communication is a long time to be out of the picture and an open invitation to competitors to stake market share.
Direct mail represents an effective and efficient communication vehicle. The medium allows companies to move swiftly and, with the right data, to communicate in a highly targeted fashion.
Those companies with the foresight to adapt to challenging conditions and to continue to invest in high-quality marketing will immediately set themselves apart from more cautious competitors in the short-term. More encouragingly, evidence points towards these forward-thinking businesses remaining ahead of the field once the economy is back on track. For businesses of every size, direct mail is recognised as an ideal medium with which to transform a period of apparent pain into one of potential gain.
