How do you market to consumers who don’t want to spend any money?
That’s the job advertising and marketing shops face in this recession.
They’re finding companies that tout value products,even as they pare ad spending themselves,are getting more bang for their buck.
“Bottom line, people are still advertising,” said Andre Filip, chief executive at Irvine-based ELA Advertising. “Con-sumers are still spending money,they’re just spending it differently and more conservatively.”
Late last year, advertisers started pushing the importance of value in their ads. Automakers stressed better gas mileage and lower prices, while fast food chains touted cheap menu items and coupons.
Automakers
Fountain Valley-based Hyundai Motor America Inc., part of South Korea’s Hyundai Motor Co., cut back advertising but less so than other automakers did.
The company gained some attention with a hardship return policy, which prompted some on-the-fence buyers to buy Hyundai autos with safety nets if they lost their jobs.
Other automakers also launched ad campaigns plugging values, including Irvine-based Mazda North America Operations and Cypress-based Mitsubishi Motors North America Inc.
Mazda, part of Japan’s Mazda Motor Corp., has been updating its advertising weekly and pushing sporty, fuel-efficient cars.
Mitsubishi, part of Japan’s Mitsubishi Motors Corp., is offering discount pricing to Sam’s Club members.
“Everybody has to have some sort of reason why it’s good to take the money out of your wallet and spend it this time and with them, rather than the consumer holding onto it for a better value,” said Sean Hardwick, senior vice president at the Irvine office of DraftFCB, part of New York-based Interpublic Group of Cos.
But value messaging might not be distinct enough anymore, now that most advertisers have adopted the tactic.
“Everybody has to have a value message now,” Hardwick said. “Unless you have some sort of skew on value, people aren’t going to be paying attention to it.”
So advertising agencies are having to write new rules on how to navigate a recession to survive it themselves.
Expansion vs. Caution
Businesses have split into two camps of action and inaction in their opinions about advertising in a recession, according to industry executives.
“There are the ones who are cautious and want to wait this thing out and the others who realize that this is the opportune time to stand out with a lot less clutter out there,” said Ryan Rieches, chief executive at Irvine-based RiechesBaird. “All things considered, this is probably the most inexpensive time to gain market share as some of the weaker competitors fall back.”
Some advertisers are having difficulty taking advantage of cheap ad rates because of limited money. Often marketing is one of the first things companies cut when trying to save money.
Marketers are trying to figure out a way to get companies’ messages out to people within the limits of smaller budgets, said Jim Harrington, president at Newport Beach-based O’Leary & Partners.
“Our clients would love to be doing more, but you’re restricted by the revenue stream and cautious marketing budgets,” said Ryan Abbate, president of Costa Mesa-based Pacific Communications, a healthcare ad shop that’s part of Irvine’s Allergan Inc. “I’ve heard one executive tell me about this year and last that it’s an irritation because he can’t do everything he wants to do because he knows ultimately we’re going to come out of this on the other end.”
Accountability
That leaves a lot of marketing professionals scrambling to market themselves as much as their clients. Many companies are demanding more from ad shops so they can be sure their money is being well spent. That extends the time it takes businesses to evaluate campaigns and requires shops to come up with ways to quantify the effectiveness of ad spending.
Accountability has been the industry buzzword for years. It’s taken on new life during the downturn.
“Clients are looking to their agency partners to be more critical in their thinking about what we are spending and how we are spending it,” said Dan Olson, managing partner at Young and Rubicam Brands Southern California in Irvine. “There has been a shift across the board on the emphasis on planning.”
Online
Many clients have shifted their advertising spending online as a way to reach more people for less money.
“More clients put their dollars online because it’s less expensive from an out-of-pocket standpoint,” said Harrington of O’Leary & Partners.
Internet ads also can be easily measured in terms of how many people see them.
“The shift is to more measureable, goal-oriented results,” Olson said. “There is less willingness to market for marketing’s sake.”
Online ads have their drawbacks since not every consumer regularly uses a computer. And many who do just ignore online ads.
“Online is a good way to keep the message out there, but like any other media vehicle, the Internet is simply a tactic, not the whole strategy,” Harrington said.
Most experimenting with ad strategies has been put on hold,including a lot of online ads,while advertisers work to streamline campaigns.
“In a recession you fall back on your cornerstone tactics,the ones that you know serve you well and give you the most robust impact,” Abbate of Pacific Communications said.
