Taking a chance to beat the downturn

Despite the doom and gloom of the economy, the latest data shows small businesses are still prepared to take marketing risks.

meridean
Audio specialist Meridian is expanding its operations in online marketing

The first quarter of 2013 has offered little hope of an economic recovery in Britain.

A few weeks ago, the country was stripped of its precious AAA credit rating over concerns about the government’s failure to stimulate growth and slash debt. Meanwhile, the prospect of a triple-dip recession looms large as the stream of dismal economic data shows little sign of stopping.

But for all the gloomy news and predictions, there are sharp differences among marketers over how they feel about their own prospects. While those in large organisations (revenues of £500m and above) are downbeat about their jobs, departments and wider businesses, marketers in small enterprises (revenues of £1m-£49m) are more optimistic across all measures, according to the latest confidence benchmark by the Chartered Institute of Marketing (CIM) and Deloitte (see below).

For example, while 51 per cent of marketers in small firms are more confident about their career prospects over the next 12 months compared to the previous year, the figure drops to 42 per cent in large companies – more than three percentage points lower than the UK average. Similarly, while 45 per cent of marketers in large businesses report declining confidence in marketing investment, only three out of 10 small business marketers express such concern and one-third report an increasingly positive outlook.

Thomas Brown, head of insights at the CIM, suggests this optimism is down to the ability of marketers in smaller companies to try new things despite the difficult economic climate. “There’s an agility with smaller organisations to spot an opportunity and put forward a case for investment in a campaign that perhaps wasn’t planned,” he says.

“If you couple that with the likely proximity of marketers to other people in the business such as the sales team, it means that understanding cause and effect and whether an investment delivers a return has the potential to be more straightforward than in a large organisation.”

There are plenty of examples of small businesses that are building their growth on clever marketing. Among them is social gifting app gifted2you.com, which allows people to send gifts to their Facebook friends from their mobiles. The brand is already generating a strong following despite launching only three months ago.

Its marketing activations so far include a promotion for Valentine’s Day in which it offered people £5 of pre-loaded credit if they downloaded the app. The investment proved a smart move from a PR perspective as it helped gifted2you become one of Macworld magazine’s selected apps for Valentine’s Day.

Chief executive Andrew Wilmot suggests that beyond these initial monetary incentives, the brand can build its customer base at no expense thanks to its roots in social media. “For every person we pay to recruit, we estimate that person will get 3.5 friends recruited into the network,” he explains.

“When they send gifts, they’ll also post Facebook messages with our brand name on their wall and gifts will arrive wrapped in our logo and URL. There’s a strong viral effect to it.”

Wilmot says that although securing finance for the start-up proved challenging, its focus on social media, mobile and gifting proved crucial in convincing its partners to back it. The business was able to get off the ground thanks to funding from private banking service Coutts and a partnership with payment services group SecureTrading.

“Everyone is looking at ways to monetise social networking and this is one of them,” he says. “It’s a growth market. Analysts are predicting that this year will be the year for social gifting, and there are a number of players with different flavours that are growing well.”

Specialist audio equipment maker Meridian is another small company that is expanding its operations through online marketing. Last month, the brand worked with marketing agency Tangent Snowball to unveil a website redesign and new customer engagement strategy.

Meridian brand marketing manager Lisa Sullivan explains that this new approach is designed to help the brand expand beyond its tech-savvy specialist audience and reach a wider demographic. “Our previous website was very copy-heavy and wasn’t particularly aspirational. This is more of a visual approach.

“We’ve created areas on the website that are designed to inspire a wider audience by showing our products as configured collections. So we’re not just talking about our speakers or our CD players – we’ve started to educate that wider audience on how our products work together as a system.”

As well as the website redesign, Meridian is allocating more marketing spend to social media, search engine optimisation and pay-per-click strategies. Sullivan says this investment could also include building relations with online bloggers, who can discuss the brand in a broader context to its traditional technology background. “One option could be interior design bloggers, who could help us get across the design aspects of our brand,” she explains.

Sullivan says that by focusing on products and retail partners, the business has succeeded in riding out the difficult economic environment. When she joined the company last year, its marketing team consisted of herself and a vice-president but it has since added two more recruits. Sullivan suggests it could grow further as the business looks to expand under its new marketing strategy.

“By having robust strategies in place, we’ve made sure that we’ve been fairly consistent in our key markets and now we’re starting to experience growth,” she claims. “We’re still a small department but there could be potential to add to it as the business develops and expands in new product territories.”

The CIM benchmark shows that marketers in smaller organisations are more confident about staff levels than their counterparts in big corporations. While more than 20 per cent of marketers in large businesses predict a reduction in headcount over the next three months, in small businesses the number anticipating cuts is less than half that at 8 per cent.

innventure logo

But not all small business marketers are planning for growth on the basis of increased manpower or resources. Hospitality chain Innventure, for example, is focusing much of its marketing around a customer loyalty scheme hosted by marketing software agency Footfall123. This means that rather than spending money on each of its campaigns, Innventure has acquired templates that it can use for different promotions, including email offers, online voucher codes and loyalty cards.

In the run-up to Christmas, the chain used these tools to sell gift vouchers across its four restaurants and two hotels, which are based in several southern counties. Innventure sent various online offers to its database of 15,000 customers to drive interest in the promotion. The company has even set up its own marketing agency, named Offertune, to incorporate the in-house loyalty tools it has developed in partnership with Footfall123.

“Social media has definitely had an effect on voucher sales,” says social media director Charlie Gerard. “Because we managed to sell 650 vouchers over Christmas we’ve been able to make more of our quiet period, which is between January and March, because people have to come in to redeem them.”

Perhaps one of the most telling findings in the CIM survey relates to the relative time spent on innovation. While 26 per cent of large organisations are setting aside 10 to 50 per cent of marketers’ time for experimentation, the same is true of 33 per cent of small companies. The growth of brands such as gifted2you, Meridian and Innventure shows the benefits that smaller firms can reap when they try something new.

CIM confidence monitor

Marketers in small enterprises are more confident than their counterparts in large corporations, according to the latest quarterly confidence benchmark by the Chartered Institute of Marketing (CIM) and Deloitte. For example, 28 per cent of small business marketers predict a near-term increase in marketing spend, compared with 17 per cent in large organisations.

The benchmark involves a survey of 1,337 marketers across a range of companies in January and February this year.

Other findings show that 29 per cent of marketers in large businesses see a high risk to job security over the next 12 months, compared with 18 per cent in small firms. Meanwhile, more small business marketers report increasing confidence in business performance than those in large companies (42 per cent compared with 35 per cent).

CIM head of insights Thomas Brown says this greater confidence may be down to the level of “agility” afforded to marketers in small firms, though he also questions the extent to which this is a long-term trend.

“It’s going to be really interesting over the course of the year to see whether that near-term optimism is sustained quarter on quarter or whether it’s more a case of new year’s optimism that doesn’t follow through,” he suggests.

“Set against that short-term enthusiasm is the fact there is still a lot of concern on the part of the marketing community, more than half of whom believe consume confidence is going to slip and UK GDP is likely to have a contraction again in the next three months.”

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