When Do Companies Stop Marketing: Success or Suicide?

There is no question that marketing is the first department to lose in economic downturns. Companies have already started cutting marketing jobs, canceling sponsorships, and scaling down budgets. While we all understand the necessity and the reasons behind it, I want to write about how big companies with unlimited resources freak out in a recession and lose opportunity.

The bigger a company is and the more complex its structure, the more vulnerable its marketing department will be. Many marketers might disagree with me on this point, however, current statistics involving many big players in the market prove my point. We all know that consumers are spending less money and it has direct affects on companies; however marketing is not the same thing as advertising. This is a major difference that is misinterpreted quite often.

FedEx announced that it’s trimming its 2009 marketing budget by 25% this morning on the corporate blog. They stated that the cuts would most likely come in “non-contractual” agreements. So what does this really mean? It means that they would keep their long term sponsorships, which are really important to them, and make cancellations in short term marketing efforts such as Viral Marketing and Online Marketing. NASCAR Races and the National Football League agreements are signed long term and it would not be wise for FedEx to cancel something like that since they’re a name brand.

So, will companies actually start getting rid of short-term marketing efforts? I believe that online marketing, branding, as well as viral marketing would be on top of that list. But are these the only cuts?

The answer to that question may be found in Home Depot’s latest announcement that was released this morning. After 16 years of sponsorship for US Olympic and Paralympics Teams, Home Depot decided to suddenly end it. This was a major long-term deal; it was a major part of their marketing efforts worth approximately 5 million dollars per year. Of course, the bad economy is to blame again.

This tells us that nobody is really safe. Seems like no marketing effort or sponsorship is strong enough to stand against the economic downturn. However, I still believe that we cannot draw a conclusion from a sample size of 2 big companies. Although, the majority of companies who have enjoyed double-digit annual growth rates for the past decade will start to cut back, there are still many companies who are experiencing stable growth. There’s still enough space for innovation and creativity, which by the way, always nourishes even in the worst of economic times.

My marketing friends … hang in there. Keep creating ideas, innovation, new technologies, and strategies. This is our time to grow and make a difference. This is our time to show other industries how it’s done. It’s time to separate the men from the boys.

-Duran Inci

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January 11, 2009

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