Media monitor - january 2009

Marketing in a Mess: Staying Ahead of the Competition
By Ray Mayo, Managing Director

The holidays are over and we are well into the New Year. It’s back to business, and surely one of the topics on many minds is what does 2009 hold? Will this next year be a time for survival, or a time of unprecedented opportunity? Should we slash marketing budgets or fight to maintain 2008 levels? What about new product rollouts? Is the media industry stable? If the consumer is in control of their media universe, how can we connect to them? How long will all of this last?

Clearly, it is a time when there are many more questions than there are answers. We have been through recessions and times of serious uncertainty before, but not like this. Marketers are fearful of doing nothing, and even more fearful of doing something that does not have a direct and positive impact on ROI. The paralysis of inertia can bog down even the most savvy marketers and agencies. Inertia is never good, but when coupled with confusion about the perceived instability of the media and financial markets, it is potentially harmful.

Headlines, bloggers and video clips are overwhelmingly negative. Many retailers are struggling. The auto industry is fighting to survive. Still, most experts agree that now is the time to market for a better today and an even stronger tomorrow. Why is this? There are three primary reasons.

Historical Precedence
There is a tendency to eschew history while in the throes of crisis, but the most successful companies don’t and haven’t. There are numerous stories about those who sustain when times are tough. Below are some examples with hard statistics to back them up.

• Wal-Mart used a key competitive opportunity during the 1990-91 recession to open new stores and market aggressively throughout the Midwest, resulting in the most successful period in the retailer’s history. Same store sales increased 10-11% per year from 1990 to 1992.
• A 2002 PIMS study of more than 3,500 U.S. companies revealed that those companies which maintained or increased advertising spending in calendar year 2002 experienced share increases twice those which reduced marketing expenses.
• A McGraw Hill study of 600 companies from 1980 to1985 revealed similarly that companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise.

Debating a new product launch? Don’t let the economy stop you! Some of the most successful product launches in the past 30 years have been during economic downturns. Cable networks MTV and CNN were launched during the 1980-82 recession. Kimberly Clark launched the “Pull-Up” brand during the recession of 1991-92. Unilever launched Axe body spray in 2002, and at a premium price! Perhaps the most noteworthy on this list is the Apple iPod – launched just six weeks after 9/11 – which has soared with sales approaching 200 million units.

Widespread Misperception
There is a common misperception – or maybe it is just plain, old confusion – about what is happening in the consumer’s media world. Yes, we live in a media universe where the consumer is in control. It is also true that the consumer has more options than ever before with more cable channels, radio and music options, websites and print choices. Though it is well documented that many media companies are struggling, the “in-control consumer” actually spends more time with mass media than in the past.

According to Veronis Suhler, the average American spent 3,333 hours with consumer media in 2008. That’s twice the amount of time the average full-time employee spent at work, and far more time than they spent doing any other single activity, including sleeping!

• The average U.S. household viewed 142 hours and 29 minutes of TV each month in 3rd Quarter 2008 – a 4.1% increase from the same period in 2007. (Source: Nielsen)
• The average adult spent 27 hours and 18 minutes online each month in 3rd Quarter 2008 – a 5.7% increase from 2007. (Source: Nielsen)
• Radio, or terrestrial radio as we now refer to the medium, reached 93% of U.S. adults in December of 2008. Additionally, the average person ages 12 or older listened for 18 hours and 30 minutes per week. (Source: RAB)

Americans are passionate about their media, and as time-shifting and on-demand technologies flourish, expect to see continued increases in media consumption.

Evolving Environment
More choices provide the consumer with a “bigger playground,” while also presenting marketers with a greater challenge in making a connection with their customer. This does not necessarily create a bad environment, just a rapidly changing one – one which requires a constant pulse on the economy, as well as the marketing and media landscape.

Reduced volume can be an attractive opportunity. Wharton Professor Leonard Lodish believes that advertising expenses are all the more defensible with a reduction in marketplace demand. “If your company has something to say that is relevant in this environment, it’s going to be more efficient to say it now, than to say it in better times,” says Lodish.

MayoSeitz Media’s Parting Words
The well-known conventional wisdom has been to market in economic downturns. Today, vision and sound internal marketing fundamentals are needed to assess the marketplace and out-think the competition. Marketing through fear and uncertainty only yields confusion and disparate results.

As we witnessed in 2008, you can expect 2009 to be bumpy at times, and there will certainly be some significant hurdles to clear. Though it may not be apparent at the moment, sunnier economic days are ahead. Until then, have a plan; recognize the competitive environment; and, execute your vision flawlessly.