If business gets any worse...we probably should start advertising

Customer Inter@ction Solutions, Apr 2001 by Tehrani, Nadji

In June 1996, my Publisher's Outlook was entitled, "The Sad State Of Marketing In Corporate America." Although it's been nearly five years since I wrote that article, the situation has not changed. To appreciate the contents of this current editorial, please first read "The Sad State Of Marketing In Corporate America," which you can find on the Web at www.tmcnet.com/ccs/0696/telpo.htm.

As a student of marketing for much of my life, I have always been amazed that so many marketing managers, directors and executives just don't follow the basic principles of the discipline, which is unfortunate for both the companies they serve and their own personal careers.

As I have stated often, marketing is the lifeblood of every corporation. If I recall correctly, a leading marketing guru once said: "Companies exist for two reasons, marketing and innovation." As strange as this statement may seem (to the people who have no clue about marketing), marketing is, in fact, even more important to the survival and prosperity of any company than stated above. In fact, in my editorials since 1982, I have made the following original statements about marketing:

1) If you don't market, you don't exist.

2) Marketing is not a part-time job.

3) Unlike the common belief of most high-tech companies, marketing should not be regarded as a necessary evil, but rather it should really be the other way around! No company can go very far or even exist without a well-prepared, strategically sound and realistic (cost-effective) marketing program.

I have frequently stated that the lackadaisical approach of high-tech companies to marketing accounts for their high failure rate, a rate that is, in fact, higher than any other sector of business. As I indicated in my last editorial (March 2001), the unfortunate mistakes of Dr. Alan Greenspan in raising interest rates have seriously aggravated the situation. In fact, this ill-advised action by Dr. Greenspan caused the loss of not only trillions of dollars for investors, corporations, individuals, retirement funds, etc., but also had an even worse effect on capital. Such capital is the lifeblood of many pioneering and innovative companies. The Federal Reserve Board Chairman's actions literally destroyed any chance of success for many start-up companies, which undoubtedly could have been the future Microsofts, Cisco Systems, AOLs, Sun Microsystems and Oracles of tomorrow!

I really did not mean to add salt to the wound following my March 2001 editorial entitled," Q: How To Screw Up A Perfectly Good Economy. A: Ask Alan Greenspan;' (www.tmcnet.com/cis/0301/030 lpo.htm), but the fact is that this ill-advised, totally unnecessary, irrational behavior of Alan Greenspan created a powerful downturn in the economy, the effects of which are seen in the marketplace today. I recently learned that one of the leading and outstanding hightech companies mentioned above has lost in excess of one hundred billion dollars in market capitalization!!! And that is just one company's loss. I am sure if you add up losses by other companies, individuals, families, blue- and white-collar investors worldwide, the amount would be staggeringly higher than several trillion dollars. And just think, all that got started by the unnecessary rise in interest rates to supposedly eliminate completely nonexistent inflation. Whatever happened to the conventional wisdom that states, "If it's not broken, don't fix it"?

The intention here is not to continue to bash Alan Greenspan, but to highlight what may be a less-obvious problem to which his actions have contributed, namely the slowing economy has prompted many corporate marketing managers to reduce, and in many cases, eliminate all advertising, marketing and promotional programs!

The Case For More Aggressive Advertising In A Slowing Economy

The worst thing any advertising executive can do is to stop advertising in a slowing economy. Here is what an article in the Harvard Business Review stated:

"Advertising in an economic downturn should be regarded NOT as a drain on profits, but as a contributor to profits."

It is a known fact that all sales begin with sales leads. The majority of sales leads come from effective and regular advertising. In short, there can be no new sales without new sales leads. As the economy slows, naturally sales and revenues of most, if not all, companies decrease, and about the only way to compensate for that is to bring in new business. And new business comes from new sales leads generated from continuous and effective advertising. If anyone has any problem understanding this basic and elementary fact, that person should not be in business.

Advertising Is Vital To Reverse The Loss Of Business

During a good economy, one might lose about 30 to 50 percent of its business due to natural attrition. In a slowing economy, this number is more like 50 to 75 percent of business lost due to natural attrition. It is vital to replace this attrition with new business, meaning new dollars coming from new sales leads and continuous advertising for new products and services offered by any company. It is really just as simple as that.