I’m feeling a little lonely in my belief that marketers will react to lower sales by increasing marketing spend. Now even Niki Scevak disagrees with me. And there’s this happy song sung in a minor key over at CNN.
Let’s step back from the trees to see the forest. Imagine the CMO walking into the CEO’s office. He closes the door, pulls out a chart showing declining revenue and says “Boss, Customers are getting harder to find.” The CEO says “What should we do?” The CMO says “I suggest we cut back on advertising.”
Is that what you’d say if you were the CMO? Is that what you’d want the CMO to say if you were the CEO?
When times are tough and firms have to cut expenses to stay in business–like dot-coms in 2001–marketing dollars decline, mainly because they can. It’s painful to cut personnel, rent, etc., but telling the wiseacres from your agency to go pound pavement is sort of satisfying. Right now, Countrywide aside (and to some extent not even them anymore), operating firms are not facing restructuring. The people going out of business are the hedge funds, and they don’t advertise.
I just saw a research note from Sandeep Aggarwal over at Oppenheimer. He has revised his growth estimates for online advertising down, from 26% to 25% for 2007 over 2006, and from 24% to 23% for 2008 over 2007. Considering that these estimates have a pretty large variance to begin with, I consider this no change at all. He also said that the least affected online advertising sector would be search marketing.