The playbook (Marketing): To spend or not?

Spending your way out of recession doesn't sound very smart, but building customer relationships can set up the future.

A simple rule of thumb in a recession is to avoid cutting the marketing budget. With any luck, your competitors will pull back on marketing, allowing you to score more customers because of the lack of competing advertisements. Or so the logic goes. “I’m probably the only person who’s willing to say this, but trying to convince marketers to spend their way out of a recession is ridiculous,” says Rob Guenette, Toronto-based CEO of advertising firm Taxi North America.

It’s in Guenette’s interest for marketers to splurge on advertising, but that’s simply not feasible for many companies. A recession forces marketers to reassess their strategies and figure out ways to do more with less. “As opposed to sticking to the strategic course, you have to step outside and take advantage of something that is immediate and will resonate emotionally with the target audience,” Guenette says. For example, Hyundai’s latest campaign plays off the deep recession in the United States, by allowing customers to return their new cars should they lose their income this year.

Scotiabank is another company that has recently tweaked its marketing efforts, says senior vice-president of marketing John Doig. The bank has been using the tag line “You’re richer than you think” for the past three years, and Doig says that while its optimistic message is still relevant today, not adjusting the campaign could have been a mistake. “You need to make sure you’re in tune with what’s happening to the consumer,” he says. “If you look like you haven’t changed or you’re putting the same thing out there, particularly in financial services, you’re running a risk.” To reflect the uncertainty people have about their finances lately, Scotiabank boosted the marketing of its second-opinion program, which offers consumers a free financial assessment.

But advertising campaigns only go so far, even at the best of times, and companies need to examine all aspects of their operations in order to find ways to build customer loyalty in the long term. “People often forget the most important stakeholder is the consumer,” says Markus Giesler, assistant professor of marketing at the Schulich School of Business in Toronto. “That’s the person who can do the majority of the work for you.”

Giesler points as an example to men’s clothing store Harry Rosen, whose sales staff get to know the preferences of customers and build relationships that can last for years. “At the end of day,” he says, “what counts are the ways in which you turn these consumers into followers.”