Software Marketing in a Recession
Vendors don't have to slash budgets but they do need to reposition investments to emerge from a downturn unscathed.
By Glenn Gow, Crimson Consulting Group
Mar. 03, 2008
Are we in a recession? Maybe, maybe not. Many of you have worked through the most recent recession of 2001 - 2003. For most of us, and particularly those of us involved in software marketing, "bad" doesn't quite describe how bad it was. Anything purchased by, or influenced by IT was hit hard.
This time will be different. Software won't get hit as hard - but it will suffer along with the rest of the economy. Vendors that shape their marketing strategy for the downturn will emerge stronger when economic growth returns.
During the current slowdown, it is likely that business software will be less impacted than other sectors. IT spending will likely grow slowly; it will probably not decline. Consumer markets are likely to be harder hit than business-business (B2B) markets.
Many enterprise software solutions are accurately positioned as improving efficiency and productivity. Hardware providers have a harder time defending that argument (can you say, "virtualization?") Another saving grace is that for most of us, the U.S. market represents a smaller percentage of overall revenues and profits than in the last recession.
Smarter Marketing During a Downturn
Let's assume that at least the U.S. economy will be in a recession and that as software marketers, we need to work within that reality.
Historically, software companies cut marketing first and deepest. However, for most companies, this is a mistake. To quote one of my Harvard professors, John Quelch, "It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times." It's my contention that this applies to marketing investments as a whole, not just advertising.
Here are some tips for how software companies should alter their marketing strategies, just in case a recession is reality.
1. Spend smarter
You may spend less on marketing. Not because marketing should be cut first or most (it most certainly should not), but rather because your company may cut budgets across the board. In fact, by showing how you intend to spend smarter you will make it easier to fight for your resources (see no. 6 below).
By "spend smarter", I mean create a clear-cut justification for the investment. While you won't always be able to measure the ROI (this is marketing after all), you can have your people create a compelling business case for each investment. Then, when it comes time to justify the investment, you will have established sound business reasoning behind it. And that's what the CEO and CFO need to see in a recession.
For example, consider the costs of certain tradeshows and contrast those with investing in blogs, podcasts, webinars, wikis, blogtracking, and online communities. Consider what you spend on print and non-web media advertising and examine web advertising even more closely. Chances are, now may be the time and the opportunity to do something you always wanted to do anyway.
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This time will be different. Software won't get hit as hard - but it will suffer along with the rest of the economy. Vendors that shape their marketing strategy for the downturn will emerge stronger when economic growth returns.
During the current slowdown, it is likely that business software will be less impacted than other sectors. IT spending will likely grow slowly; it will probably not decline. Consumer markets are likely to be harder hit than business-business (B2B) markets.
Many enterprise software solutions are accurately positioned as improving efficiency and productivity. Hardware providers have a harder time defending that argument (can you say, "virtualization?") Another saving grace is that for most of us, the U.S. market represents a smaller percentage of overall revenues and profits than in the last recession.
Smarter Marketing During a Downturn
Let's assume that at least the U.S. economy will be in a recession and that as software marketers, we need to work within that reality.
Historically, software companies cut marketing first and deepest. However, for most companies, this is a mistake. To quote one of my Harvard professors, John Quelch, "It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times." It's my contention that this applies to marketing investments as a whole, not just advertising.
Here are some tips for how software companies should alter their marketing strategies, just in case a recession is reality.
1. Spend smarter
You may spend less on marketing. Not because marketing should be cut first or most (it most certainly should not), but rather because your company may cut budgets across the board. In fact, by showing how you intend to spend smarter you will make it easier to fight for your resources (see no. 6 below).
By "spend smarter", I mean create a clear-cut justification for the investment. While you won't always be able to measure the ROI (this is marketing after all), you can have your people create a compelling business case for each investment. Then, when it comes time to justify the investment, you will have established sound business reasoning behind it. And that's what the CEO and CFO need to see in a recession.
For example, consider the costs of certain tradeshows and contrast those with investing in blogs, podcasts, webinars, wikis, blogtracking, and online communities. Consider what you spend on print and non-web media advertising and examine web advertising even more closely. Chances are, now may be the time and the opportunity to do something you always wanted to do anyway.
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