When recession or even just a period of slow sales activity looms one of the markets to be hit hardest is property and real estate. As money gets tight the natural – and logical – reaction is to spend less. After all if people are spending less you shouldn’t need to invest as much in getting your share of a smaller cake.
That’s what most firms do – especially as they tend to see marketing as one of the easiest areas to cut back on.
Makes sense, right?
It is certainly true that in the short-term you will do better as a result, but it makes even more sense to look at the long-term. What happens is that if you keep spending when things get back to normal – if there is such a thing – you will be far better placed than your competition.
How do I know this? Because of a long-term study called PIMS – which stands for Profit Impact of Marketing Strategies.
I first became aware of this nearly 30 years ago when I was on the board of the Ogilvy Group. People in business have short memories. You may even have forgotten the great banking catastrophe of 2008. In that year a presentation at the U.K. Institute of Practitioners in Advertising (IPA) conference compared the results achieved by firms that increased, maintained, or reduced marketing spend during recession. Those that cut spend had a better return on investment during the recession – but they did worse after the recession ended.
The reason for this was simple.
It is about the relationship between share of market and share of voice. The higher your share of voice compared to your market share, the more likely your brand is to grow its market share in the years that follow. So if you increase your marketing investment when competitors are reducing theirs, you substantially increase the saliency of your brand.
The real trick, I guess, is to keep your nerve.
I happen to be chairman of a U.K. firm that arranges events. We kept promoting during the recession when others cut back or even stopped. When things got better we found that quite a few of our competitors had gone broke.
My advice: keep spending as much as you can.
But this is only true if you actually measure the results of your advertising and marketing – which seems obvious commonsense. It is easier now that it ever was because of the internet, but many firms don’t bother.
However that’s another story.
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This column was written by marketing guru Drayton Bird who has worked with several Thai property companies in the past. David Ogilvy, the founder of the international advertising, marketing and public relations firm Ogilvy & Mather said: “Drayton Bird knows more about direct marketing than anyone in the world.”
