Transcript of Episode 2 - The Susanna Hutcheson Power Marketing Show

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Hi there. This is Susanna Hutcheson. Welcome to the power marketing show.  Today’s show is devoted to something that I’m sure you’ll be concerned about because it affects you right now. What should you do about your advertising and marketing in this volatile and extremely bad economy?

Now, the easiest thing to do --- the most obvious thing to do --- the most common thing to do is to cut down on your marketing or even to cut it out altogether. Is that what you intend to do? I hope not. Why? Because it’s the wrong thing to do. Let me explain.

Many, perhaps most, small business people cut back on advertising during bad economic times. That's just the opposite of what they should do.

A study published in Business News Week, 12/4/87 indicates that you should do just the exact opposite.  The great advertising agency of Ogilvy & Mather and the U.S.-based Strategic Planning Institute found a clear link between increased spending on advertising and increased market share. The study showed that companies spending “much more” on advertising than their leading competitors as a percentage of actual or projected sales, captured 32% to 40% of the market...companies that spent about the same as their rivals gained a 23% market share, and those spending “much less” had to settle for less than 15% of the market.  Market share greatly affects profitability.  Companies with greater than 40% market share have an average return on investment of 41%, while those with shares under 10% return profits around 9%.”  If you continue to market during a recession, or even a Depression, while your competitors cut back on their marketing, you can capture a larger piece of a shrinking pie...and when the economy turns around, you find yourself in an incredibly strong position.

David Ogilvy said . . .

"If you stop advertising a brand which is still in its introductory phase, you will probably kill it - forever. Studies of the last six recessions have demonstrated that companies which do not cut back their advertising budgets achieve greater increases in profit than companies which do cut back. In a Morril survey of 40,000 men and women involved in the purchase of 23 industrial products over five years, it was found that share-of-market went up in bad times - when advertising was continued.”

If you're smart, you'll increase your budget during bad economic times. That suggestion was made to me by the late Cecil Hoge of Harrison Hoge Industries and author of  “The Electronic Marketing Manual.” Good advice. Cecil was a multi-millionaire. He didn’t get that way by being shy or fearful. He spent money to make it. Plain and simple.

The people who get rich spend lots of money to get that way. Pinching pennies just gets you pennies. Let me explain.

A wealthy coin dealer by the name of B. Max Mehl of Fort Worth, TX was, at one time, the best known and richest coin dealer perhaps in the world. Allow me to take an extensive quote from "Illegal Tender" to illustrate my point.

"Born in Lithuania in 1884 and settled in Texas with his family at age eleven, Mehl was the first coin dealer to recognize the value of spending money to make money. Though a dull, runtish man with slicked-down hair, he became a P.T. Barnum-like character. His eyes darting suspiciously behind rimless glasses, he always started (sic) straight past the camera, tight-lipped, unsmiling, seemingly bereft of humor - except in print."

Mehl was a shameless self-promoter --- not unlike many here on the Web. He advertised coin collecting and himself to the public in grandiose terms as no one before him or since him. By 1919, he was spending $5,000 a year in advertising. By 1924 he was spending ten times that. THROUGHOUT THE DEPRESSION YEARS HE WAS SPENDING A SENSATIONAL $100,000 A YEAR ON ADVERTISING! That was about $15,04921.04 in 2007 dollars.

The result? He made millions. His clients included people like King Farouk, who spent millions with him. He got over a quarter of a million inquiries per year from his advertising. And, remember, this was during the Depression.

So here's my point. You can pinch pennies and have lots of pennies or you can spend big money and have much bigger money.

The decision is yours.

Let’s talk a minute about Procter & Gamble. To this day, P&G maintains a philosophy of not reducing advertising budgets during times of recession, and the company certainly did not make any such reduction during the Depression. It's not a coincidence that P&G has made progress during every one of the major recessions. While competitors cut ad budgets, P&G increased its spending. While the Depression caused problems for many, P&G came out of it unscathed. Radio took P&G's message into more homes than ever, and P&G became a pioneer in effective use of that medium, including its role in creating the notion of soap operas.

Another marketing hero is Chevrolet. During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and, by 1931, Chevrolet took the lead in its field. It is believed that Ford's weaker balance sheet entering the Depression rendered it unable to respond to Chevrolet.

And, while I’m no fan of cigarettes, I do admire their advertising. In 1920, Camel cigarettes was the top-selling tobacco product. American Tobacco Co. then struck back with the Lucky Strike brand, and by 1929 Lucky had overtaken Camel as the No. 1 brand. Two years later, in the heart of the Depression, Chesterfield also overtook Camel. Camel countered with a dramatic increase in ad spend and, by doing so, demonstrated the power of advertising during depressed times. By 1935, it was back on top.

And, here’s a  marketing in the Depression story that I can’t tell enough. Let me share it with you now.

Fortune magazine was founded by Time co-founder Henry Luce in February 1930, four months after the Wall Street Crash of 1929 that marked the outset of the Great Depression. Briton Hadden, Luce's partner, wasn't enthusiastic about the idea, but Luce went forward with it after Hadden's October 15, 1929 death.

Luce wrote a memo to the Time, Inc. board in November 1929, "We will not be over-optimistic. We will recognize that this business slump may last as long as an entire year."

 

Single copies of that first issue cost $1 at a time when the Sunday New York Times was only 5c.  At a time when business publications were little more than numbers and statistics printed in black and white, Fortune was an oversized 11"x14", using creamy heavy paper, and art on a cover printed by a special process.[4] Fortune was also noted for its photography, featuring the work of Margaret Bourke-White and others.  I have one of the first issues in a frame over my computer to remind me that when times get tough, the tough really do get going. And spending. And advertising. And starting things.

Let me tell you a modern-day story. I have a wonderful client who is starting another great magazine during another deep, dark time. We are in the deepest recession since the The Great Depression and the time of Luce and his Fortune magazine.  I have a client who is a modern-day Luce. Kimberly Brock is young, but she has a tremendous background in her field. She has enthusiasm pouring from her. And, she’s put together a brilliant team to help her succeed. I’m proud to be part of that team. Kim isn’t afraid to invest in her dreams. She believes in her publication and it’s focus. Her magazine, Pain Solutions, is going to be successful. It will thrive while many other, more famous, well established magazines are folding.

But, I have other clients and prospective clients who are timid and fearful. They hold a dollar so tight the green comes off. They want 24 pages of copy but can only pay --- or will only pay --- for two pages. These people are losers.

Edmund Burk said, “No passion so effectually robs the mind of all its powers of acting and reasoning as fear.”

Do you fear digging your heals in, holding your nose and investing in yourself and your business? If so, you’re stopping the flow of success. Now, maybe you don’t believe in your product or service. If not, you shouldn’t invest in it. But, if you do, I suggest you follow the advice of multi-millionaire, Oprah Winfrey who said, "What I know is, is that if you do work that you love, and the work fulfills you, the rest will come."

If you’re thinking about cutting back on your advertising and marketing, think again. If you’re very smart and want to be very successful, you’ll spend more and dare to do more so you can be more and have more.

This is Susanna Hutcheson and you’ve been listening to the Susanna Hutcheson Power Marketing Show. My main Web site is powerwriting dot com.

And, remember – if you know that an animal is being abused, call your local Humane Society. Animals, like people, deserve kind treatment and abusers deserve punishment. They’ll abuse people next.

I’ll see you soon.

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