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SHOULD YOU CUT BACK ON YOUR ADVERTISING?

The economy is bad. It may get worse. Okay. So that’s the bad news. Those are facts and we have to live with them. These things have happened in the past and will indeed happen again. As a business person, what do you do? Do you do what most people do and cut back on advertising and marketing as the very first effort in cost savings? If so, you’re foolish.

In the first quarter, advertising spending across all media -- television, magazines, newspapers, radio and outdoor -- rose slightly in most European markets, according to figures from ACNielsen Media International

Robert Coen of Universal McCann, a media unit of ad giant Interpublic Group had predicted a year-over-year increase of 5.8 percent in December. Now, however, with "a weak economy and severe losses in advertising demand traditionally resulting in advertising under performing relative to the economy," he expects 2001 advertising growth to be just 2.5 percent - lower even than nominal GDP growth.

"Many marketers whose profits have been hurt by economic events have been forced to cut ad budgets, as ad expenses are more postponable than other fixed or locked-in expenses," Coen said in his biannual report. "But the most disastrous and sudden development had been the boom and bust in dot-com" spending.

Many media outlets are seeing 5 to 10 percent of their buyers just disappear, he noted, which not only trims their revenues but pushes down prices as the demand side gets the upper hand.

On a personal note, the stock I own in several terrific ad agencies are at record level lows. Of course, I consider that a sign to buy. But that’s another program.

The dot-com companies, or most of them in my opinion, failed because they gave away too much of the store. You can’t survive long on giving stuff away. If stuff is valuable, you must sell it at a profit. Period. The old economy has long known that. So the free ride on the Internet is over. People who continue to give away everything in sight won’t last long in any business. The whole idea of business is to make money. That’s the only real definition of business that makes any economic sense.

But having said that, why would anyone cut back on the ONE thing that makes them money --- advertising and marketing? My mentor, marketing guru and author of “The Electronic Marketing Manual” and other books, Cecil C. Hoge, Sr. once said to me when I was complaining how much I had to spend on advertising, “You need to spend much more.”

I couldn’t believe it. Spend more? I’d go broke for sure. But he should know. He wrote the book. He was rich. He was successful. So I spent more. And sure enough, my income tripled and the more I spent on advertising and marketing, the more I earned. And this was during a very bad, very long recession.

So it amazes me that this is the first thing to take a cutback when people feel hard times. In looking through Annual and Quarterly Reports of these businesses, I see many other places they could cut back and not lose money. They could temporarily lower executive salaries for one thing. They could stop buying computers for a while. And there are other expenses that DO NOT PRODUCE INCOME OR GENERATE NEW BUSINESS that could take a hit. But to cut back on the ONE THING THAT DOES MAKE MONEY AND GENERATE INCOME IS STUPID!

So should you cut back on advertising and marketing? If you want to fail, yes. If you want to be satisfied with no growth, yes. If generating new business and income doesn’t matter to you, yes. But if you want to succeed and fight off the competition, NO.

Recession or bad economic times is not the time to cut back on the one thing that generates your business for you. Notice those who spend a ton on marketing in good and bad times. Who are they? They’re the successful businesses that will be around a long time.

Moreover, small business people can not afford not to market. Fortune 500 companies can cut back and still make a profit, albeit it a smaller one. But the little guy can’t afford that luxury. There is far too much competition for every dollar spent. The person who spends the most on advertising and marketing will win out every time.

So when considering whether or not to cut your advertising and marketing budget, consider these facts. Yes, people are cutting back on advertising and marketing spending. But you only read about the big guys who can afford to do that for a limited time. You can not afford to do that at all. Not if you want to succeed.

Susanna K. Hutcheson is a professional advertising and direct mail copywriter. She was the first copywriter to utilize the Internet as a place to market this type of service. Susanna has clients all over the world. She writes everything from Web site content to direct mail and radio spots. Visit her Web site at http://www.powerwriting.com. Her email address is powerwriter@powerwriting.com. Telephone: 316-665-7626.

© Copyright 2006 by Susanna K. Hutcheson and Power Communications LLC. Any republication in any manner is prohibited without the consent of Power Communications LLC or the author. We do give you limited permission to use this article on your Web site or in your newsletter if you print it or reproduce it exactly as it appears here including this entire notice. This article cannot be sold by you or published in a for-profit publication, a pay-per-view site or a site which sells memberships. It cannot be used by schools or in textbooks without our consent in writing. Rights to use this article for a purpose other than the type of distribution for which it is intended may be purchased from us. Call us at 316-665-7626. You may, however, link directly (not by redirect) to this article.