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The Economy: Barrier or Blessing?

I keep reading “optimistic” economic predictions by reporters who make Mary Poppins sound like a pessimist. Let’s not kid ourselves; this economy has not bottomed and frankly shows no signs of doing so.

I don’t want to beat a dead horse here (having discussed this matter in our last issue), but we should make sure we are confronting the economic landscape as it is, not how we wish it to be.

Budget deficits are gushing red ink out of Washington as if the financial jugular of the body politic had been slit by an assassin’s blade. The Congressional Budget Office nonchalantly announces $300 billion a year budget deficits and projects $1.8 trillion in overspending over the next ten years as if this kind of financial madness is an everyday occurrence.

Excuse me, but where does Congress get off grilling CPA’s about their practices in front of the national media while they blithely spend hundreds of billions a year more than they collect and then quietly purloin the difference from your retirement account at the social security trust fund to cover their fiscal incompetence?

So what do (some of) the fearless leaders of our advertising industry do? They go whistling past the graveyard like Huck Finn with a fishing pole.

I don’t want to bash the industry, or it’s leading lights, but I do want to bring some reality to it. The purpose here is not to drive you into apathy, but to tell it like it is so that your strategic marketing and advertising planning can attack the battlefield as it is, not how industry cheerleaders would like it to be.

There’s nothing wrong, indeed everything right, with being an optimist. But any decent battle plan has to understand the condition of the terrain into which it is to advance.

The case in point is a recent article at AdAge.com, which reported on the 10th annual conference of the American Association of Advertising Agencies held in New Orleans recently. Under the headline “AD BUSINESS IS IMPROVING: SPENDING ON THE UPSWING”, the article gushed like a giddy school girl with optimistic projections of attendees while at the same time reporting that “…new-business reviews had gotten off to a slow start this year—in January there were $490 million in new billings that changed hands, compared with $1.9 billion the same time last year…”

In case your math chops are a little thin, that’s means January 2003’s new billings were down 74% from the prior year. There was an uptick in February, but hardly enough to justify the unbridled “…confidence that ad spending will increase this year…” Indeed, the first two months of the year were off more than 50% from 2002.

There are two points to be drawn from this. The first is that despite AAAA President O. Burtch Drake’s comments that “‘Things are improving,'” the overall statistics tell a different story. The second is the more important point; that advertisers are cutting back at the very a time they should be promoting. I made this point in the last newsletter and it is echoed in another article in AdAge.com by Advertising Age’s editor in chief Rance Crain. Talking about why Merrill Lynch’s decision to hold off on its advertising campaign to promote its “Total Merrill” brand, Crain wisely notes,

“If I were in the brokerage business, I’d take Merrill Lynch’s faint heart as a signal to uncork my own campaign, preparing investors for the upturn that’s sure to come and showing how my firm deserves to be the proud custodian of their dollars.

“Let’s assume the idea of the Total Merrill is to demonstrate that Merrill is more than just a stock broker, that it can handle all your financial needs (including banking, mortgages and alternative investment ideas). What better time to get across that message than when people are actively looking for new ways to hang on to their money? Down times are what inspired the campaign and down times are when Merrill Lynch should pour it on.”

Go Rance.

The when of such a upturn is in question, but that does not change the more basic point. As an example, while the brokerage business is not doing well presently, mortgage refinancing continues at a blistering pace.

Why not push that message / product under the Total Merrill banner? Merrill’s decision to hold off on its advertising is misguided and if maintained, will, we think, be reflected in their financial results this year.

It takes guts to promote in a downturn, but strategically it is the right thing to do.

With good research you can find out very specifically what product or service that you sell your customers or potential customers need and want now, not “when the war is over.”

In depth interviews of your public can find this nugget. Your creative people can polish and market it, and your sales people can sell the hell out of it. The economy is struggling. It will, I’m afraid continue to do so, but don’t let that stop you from honing in on your audience and then heavily promoting what they tell you they want (assuming you can deliver). Good research will drive good marketing which will drive increased sales and income.

You can use the current state of the economy to your advantage. If others are cutting back, your surveyed message will ring louder than ever and you will wind up with more market share.

Self-serving pronouncement that it is, research of this kind is exactly what we do-live, in depth surveys – and have been doing for almost twenty years.

We are fast, reasonably priced and deliver research results that will help you increase response to your advertising and marketing campaigns.