Online marketing in a downturn

Don’t expect online carnage as we had in 2000. In fact, cutting too deeply in the wrong places could put your business at a severe disadvantage for years to come. CHRIS THOMAS

By Chris Thomas

It’ll be interesting to see whether Australia heads into recession in 2009. Personally I reckon we’ll have a little bit of a slowdown, but I’ve been known to get it wrong trying to read the tea leaves.

For us in online marketing, this could well be the first serious downturn we’ll experience. The dot-com boom was a bubble; there were lots of overvalued companies. It had to go “pop”!

But this time around it’s different; most successful online companies have well and truly matured; they have proven business models and enjoy great revenues. So I don’t think we’ll see anything like the online carnage we saw in 2000.

From a business perspective, prudent decision making is going to be paramount. You’re probably already starting to think about where you might be able to cut cost, even if you haven’t been forced to yet… just in case.

Not surprising really, given all the layoffs we’re starting to read about in the papers. I’m old enough to clearly remember the early ‘90s recession. Lately there have been some days when “that feeling” has returned.

I read recently that during previous downturns (or recessions in ’73 and ‘91) companies who went against the trend and increased their marketing budgets were just as profitable as the ones that cut back on marketing spend.

However, when the dust settled and economic activity began to lift, the companies who had been marketing heavily were rewarded with growth rates three times higher than those that hadn’t.

In the short term, cutting marketing budgets looks good on the balance sheet, but over the long term could really hinder the business. I don’t think we need to necessarily increase budgets, but I do think we need to spend our existing budgets more wisely!

I guess the thing is that unlike TV or radio, online marketing allows you to see, pretty much in real-time the ROI on your advertising budget. In terms of accountability, online marketing can be brutal! There really is nowhere to hide!

For example, if you launch a new Google AdWords campaign, you can tell after just a few hours whether it’s going to be successful or not. But at least you can adjust it in real time, or pause or even delete.

And when it comes to an ongoing SEO campaign (which can often take a while longer to bear ROI fruit), if you continue on while your competitors scale back, it can give you a ranking advantage so you’re ready to roll when good times inevitably return.

Remember that marketing is an investment, not an expense; and you should be getting the most out of your budget. So use a balanced approach. If you cut costs in one area, think about putting the savings into another. Perhaps that money could be invested into your Google AdWords instead?

It is possible to be successful during a downturn, so carefully consider all decisions and make sure you try and take a longer term view. Cutting costs in the wrong places might set you back behind your competitors for years to come. If you elect to reduce wholesale cost-cutting and run things a little more efficiently, you could end up a long way ahead come the new dawn.

Chris Thomas heads Reseo, a search engine optimisation company which specialises in creating and maintaining Google AdWords campaigns and Search Engine Optimisation campaigns for a range of corporate clients.

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