Running on empty; Consequences: Dot-coms weigh the risks of what happens when they slam the brakes on ad spending.(Brief Article)

Advertising Age, November, 2000 by Gilbert, Jennifer

When dot-coms awoke at the end of spring to find their coffers nearly empty, many pulled the plug on marketing. Suddenly dot-coms touted slashed ad budgets as proudly as children with straight-A report cards. Prudence replaced aggressive, pull-out-all-the-stops extravagance as a badge of honor.

But in cutting back on marketing spending, what were dot-coms risking? Evidently not much, contends Charlene Li, senior analyst at Forrester Research. "Usually if you decrease your marketing, your revenue will take a hit. But what I've found is that a lot of these dot-coms were wasting their marketing dollars," she says. "So by cutting their marketing dollars, it didn't have any impact on revenue because the advertising wasn't doing anything in the first place."...

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