The economy might be in the grip of its worst crisis for decades but marketers are throwing off the gloom. Just six months ago, they were pessimistic about the future but now many appear to be buying into the idea of the fabled “green shoots” heralding a recovery.
The latest wave of the Chartered Institute of Marketing 2009 Marketing Trends Survey, unveiled exclusively by Marketing Week, shows that it is particularly marketers in smaller organisations who feel brighter about their businesses and their own positions.
The CIM research, undertaken by Ipsos MORI, reveals many marketers are worried they may lose their jobs in the next 12 months but many are taking swift action to protect their businesses and, in turn, their positions. Nearly half the respondents claim they have already changed their products or services.
There are now more marketers who think business for their company will improve in the next year than those who think it will get worse, reversing the expectations of six months ago when more were predicting hard times ahead. More than a third (35%) now think their company will do better in the next 12 months, whereas just under a quarter (24%) expect business to get worse.
Although more marketers still think that UK economic conditions will deteriorate in the next 12 months than those who think it will improve, the gap has significantly narrowed since last autumn from 59 to eight percentage points. More than a quarter (26%) now expect the economy to get better in the next 12 months. Close to a third (34%) think it will get worse, but this is down from 70% in October 2008.
David Thorp, director of research and professional development at the CIM, who oversees the study, says he believes that, in contrast to six months ago, when screaming headlines told marketers the economy was heading over a cliff and there was real uncertainty in the air, there is now an element of realism out there. Practicality has kicked in and many marketers have been putting strategies into place to cope with the recession.
He explains: “I think it’s almost a rebound effect, a natural reaction – similar to the adrenaline rush you experience when you’re accelerating down a rollercoaster. When you actually get to the bottom, it doesn’t necessarily feel as bad as you thought it might on the way down; the panic subsides.”
For marketers, he says that when they “speak to customers” and get feedback on their activities, they realise that “the world does not look as grim as they thought it might.”
While the number of marketers who expect business to get worse (at 24%) may be twice as high as the level prior to the current downturn (before September 2007), this is down 5% since autumn last year.
Being able to adapt quickly seems to be a factor in why marketers in smaller companies (those with up to £1m turnover) are the most positive: as many as 45% predict business will improve over the next 12 months compared with 18% who believe it will get worse.
In contrast, among larger companies (with turnovers greater than £100m) 30% think it will get worse and another 30% believe it will improve. Thorp says: “One of the reasons smaller companies can be nimbler is that, in big organisations, marketers are often locked into spending patterns that are not so easy to get out of quickly.”
Despite the general increase in optimism, there are still major concerns for marketers. Job security appears to be a massive worry with nearly one in five (18%) of those who are self-employed claiming to be anxious that the recession might cause them to close their business and a third (32%) of those who are employed are worried about losing their job. Those most concerned about their jobs are those working in larger companies (39%), manufacturing/ engineering and infrastructure sectors (38%) and the technology and telecoms sectors (45%).
Perhaps this is due to the perception that big businesses are more able to trim down their staff numbers or that marketers in large firms feel more distant from those in the company making financial decisions.
Separating the large from the small
The divergence in mood between large and small companies is emphasised in the job security context, with 43% of marketers in companies with a turnover exceeding £100m saying their organisations are likely to reduce their marketing staff, compared to just 8% in companies with a turnover of less than £1m.
In terms of career advancement, almost all marketers (94%) feel that taking responsibility for their own development and learning is becoming essential in today’s workplace. Two-thirds (64%) of CIM members feel that having a recognised marketing qualification gives them a greater sense of security, compared to less than three in ten (29%) of non-members who think so.
While nearly two-thirds (63%) say they do not expect to see a change in the size of their organisation’s marketing functions, of those that do expect a change, nearly twice as many (24%) anticipate a reduction than those (13%) who expect an increase.
The majority (80%) agree that in order to survive and prosper in difficult times, it will be essential for organisations to employ properly trained and qualified marketers. More than a third (37%) agree strongly that this is the case.
This type of training does not appear to have made the recession a career-enhancing prospect for many, however. Although nearly half (47%) of marketers say the recession has forced them to change their products or services offering – with those in financial services and retail doing this most – just 28% think the recession has had a positive effect in opening up lots of opportunities.
Thorp says: “To my mind, the most interesting thing about this is how reactive marketers are as a profession. Nearly half of them have made changes very quickly and that shows a degree of adaptability. In many organisations, people look to the marketing department for an answer. When a business is in a hole, they look to the marketers to help them find a way out of it.”
Previous recessions have demonstrated that brave and innovative marketing can often win in the long term but while Thorp agrees that investment in marketing is essential, he warns that action must be carefully thought out.
He argues: “There is no better time to be brave than in the teeth of difficult conditions; fortune really does favour the brave, but you’ve got to know what you’re doing. It must be anchored in sound knowledge of your markets and your customers. There’s no point being brave for the sake of it as that becomes reckless very quickly.”
Thorp says that with so many businesses cutting back on marketing spend, it is possible for those investing in it to really stand out from competitors.
Opinion is, as yet, divided over whether marketing is bearing the brunt of any cost-cutting measures, with a third (34%) agreeing this is the case, compared with 42% who disagree. On average, 7.2% of the turnover of organisations is accounted for by their marketing spend (excluding salaries), slightly down from October 2008 when it stood at 7.6%.
Public relations comes out on top as being both the most widely used marketing tool (used by 83%) and accounting for the largest proportion of marketing resource with a mean of 11% – up a percentage point since October 2008.
CRM is hot on PR’s heels, though, commanding 9.9% of resources, and almost a quarter of marketers (24%) believe that CRM delivers the best return on investment. This trend looks set to take off even more as the year continues.
Thorp says: ” I expect CRM to overtake PR in the not-too-distant future. I think what we are seeing is much more savvy marketing spend and CRM is much more accountable. The trend also shows that we will come out of this recession much more technology-driven than we were before.”
The need for accountability is further underlined by offline advertising being viewed as delivering the worst return on investment by almost a quarter (23%) of marketers, with sponsorship being rated as the second worst at 11%.
It is these two disciplines that may bear the brunt of cuts in spend. The highest expected change in spend is in advertising (excluding online) where the average anticipated reduction is 4.9%, followed by sponsorship, where an average reduction of 3.7% is expected.
An increasing understanding of social networking and other web-based activity is demonstrated by over half (53%) of marketers now finding that web-based communities and applications are increasingly relevant to their organisations. A quarter (26%) think that social networking is the most important tool; among self-employed marketers this rises to 52%. Next in importance comes user-generated content at 20%, followed by blogs at 16%.
Thorp says: “We are becoming, for better or worse, a technology-enabled profession, and quite fast. It’s going to be one of the fundamental things to come out of this recession – the shape of the marketing profession will be changed irrevocably.”
The move to channels which are more readily accountable than others may, in part, be due to many marketers finding it increasingly difficult to secure funding. Three-fifths (59%) are finding it difficult to secure marketing budgets or funding, up from 53% in October 2008. The CIM says that in the four years since it began running the survey, those finding it difficult to secure budget have always outnumbered those finding it easy. In this latest wave, however, the gap has widened significantly. The difference is now 20 percentage points, up from eight percentage points just six months ago.
Of those who find it difficult to secure marketing budget, 78% think this is at least partly down to the current economic conditions, up from 64% in the previous wave. One in six (16%) think it is wholly down to the current economic conditions – more than twice as many as in October 2008 (7%).
Thorp says: “I suspect what they might be seeing is some of that adaptability we referred to earlier. Some marketing spend has gone out of longer-term strategies and instead is being put into dealing with the here and now in a reactive, tactical way.
“Traditionally, marketing budgets have been very easy to cut – often, it’s the first thing to go. It is ridiculous really, because it’s effectively cutting future growth.”
Paradoxically, despite struggling to secure funding, nearly three-fifths (57%) of working marketers think that marketing is seen as a high priority within their organisation’s business strategy. Moreover, half (50%) agree that most colleagues understand what marketing is and how it contributes to their company’s objectives.
Marketers broadly agree that their organisations have other important objectives and 74% think companies have a duty to engage with the community they are part of. Those working in not-for-profit and public sector are, unsurprisingly, more likely to think so (82% and 85% respectively).
Opinion is divided on the subject of sustainability, however. Almost half (46%) agree that in an economic downturn sustainability will quickly drop down consumers’ concerns, but 30% hold the opposite opinion.
With the London 2012 Olympic Games approaching ever-closer, the CIM has questioned marketers on the subject, following up on questions posed in previous waves of the survey. Three-fifths (60%) believe that London 2012 has the potential to generate a positive perception of the UK internationally. This figure has fallen by nine percentage points since April 2008.
The deterioration of economic conditions, combined perhaps, with the spiralling costs of London 2012, has led to fewer marketers thinking the Olympics will be able to have a positive impact on the British economy. In this survey, 65% think London 2012 will have a positive impact, down from 71% in autumn 2008 and 79% in spring 2008.
Despite these perceptions, marketers want to get involved with London 2012. Two-fifths (39%) say it is “likely” that their organisation will undertake some marketing activities connected to London 2012. This figure rises among organisations with a turnover exceeding £100m (52% “likely”) and a similar percentage in the public sector also say such activity is “likely”.
Perhaps as a result of 87% of marketers admitting they have a poor understanding of the London Olympic Games and Paralympic Games Act 2006, many of those planning activity are in for a shock, when they discover how tightly controlled activity around London 2012 is and how limited their opportunities are.
Ignorance is not bliss
Thorp warns: “The degree of ignorance is quite remarkable. To some extent, the impression that this is great for the country, for business and a big boost to the economy is being given by the powers that be. But when you look at the Act, it’s a seriously restrictive piece of legislation. It’s an area we intend to keep monitoring.”
Marketers also admit to gaps in their knowledge of other specific industry laws, such as the Business Protection from Misleading Marketing Regulations 2008 (78%) and the Trade Mark (Relative Grounds) Order 2007 (75%).
Thorp believes that legal rigour is crucial to the marketing profession. He points out that with marketers’ greater use of technology and a sharper focus than ever on customer data, this is one area where marketers must not let themselves fall down.
For those economic “green shoots” to take root, he says, it will require marketers to take the lead in setting the agenda in this area. He warns that keeping on top of legal and ethical areas is “something we’ve got to watch”. This is an area, he reveals, where he’d expect the CIM to “explore more fully in future.”
Trends: The small company viewpoint
Chartered marketer Richard Evans is the only member of the marketing department at UK training organisation Illumine Training, which falls under the CIM’s “small company” criteria. The firm is a business-to-business operation which provides training to enhance practical thinking skills aimed at improving the performance of individuals and organisations.
In line with the survey, Evans agrees that smaller companies are naturally nimbler and he has already made a number of changes to react better to economic circumstances. “We did have some part-timers working on marketing but we have down-sized that,” he admits.
Evans also looked at Illumine’s product range and has modified some of its offering. “As a small company,” he says, “We can do that immediately and that’s because of our relationships with our clients. We can go to them and ask if they think a new idea might work and whether they’d be interested.”
Similarly, personal relationships have played a part with Evans’ suppliers. He says: “I’ve worked at large organisations and the difference here is that I have close relationships with our suppliers, rather than running on tenders and other formal stuff that can get in the way.
“When we first started to look at cutting costs, I talked with our suppliers about how we could do that, without sacrificing quality.”
Evans says he has been fortunate in that the owner of Illumine succeeded during the previous recession by investing in marketing and they are not forcing cuts to be made. Evans says: “We’re being more careful but it’s not a case of cut, cut, cut. We’re looking closely at what brings in results and focusing on that.”
In terms of adjusting channels to suit a limited budget, Evans has dropped his plans for print advertising and increased his email marketing.
“We are accountable,” he says. “Obviously it’s a small organisation and communication between departments is very good. If we get a good response to an item of marketing, I know straight away, rather than in a large company where I might have to trudge through a system to work it out, while hoping the sales team had actually completed the information properly.”
Even so, Evans says he is surprised the survey found that those in larger organisations are feeling so much more negative than smaller ones. He observes that this is perhaps because the smaller companies are “a lot closer to their clients”.
Working for a smaller business also means that the marketing role within the firm seems proportionally larger. “Marketing is not in an ivory tower in this size of business,” he says.
The biggest worry for Evans arising from the survey is the number of marketers without a good grip on legislation. He claims to be one of the small minority (13%) of marketers who have some level of understanding of the legislation related to the London 2012 Olympic Games.
He finds it “really worrying” that 87% of marketers have admitted to having a “poor understanding”.
Overall, however, Evans is one of the marketers feeling optimistic about the future, as picked up in the study. Much of the doom and gloom, he suggests, has been the result of heavy coverage of the recession in the mainstream media.
Now, he says, things are looking up. He is cheerful to discover: “There’s not such a grey outlook in the media.”
Trends: The large company viewpoint
SSL International owns international brands Scholl, the footcare specialist, and sexual wellbeing market leader Durex, as well as locally-owned brands such as cough treatment Meltus and pain relief brand Syndol in the UK. While some marketers questioned in the CIM survey have made reactive changes to respond to the economic conditions, Simon Brooksbank, head of insight and customer marketing at SSL sees this as less necessary for his own business.
“I think people are changing their habits during a recession and are certainly watching what they spend,” he says. “But within or without a recession, if you have products that meet people’s needs, they will sell.”
SSL certainly seems to be selling. Earlier this month, the company announced a 33% rise in full-year operating profits, a result well in excess of expectations, allowing it to issue new earning growth targets and increase its share price.
Marketing Week columnist Aidan Bocci recently spoke to SSL International’s chief executive Garry Watts, who told him he encourages a “counter cultural” approach so that his teams can come up with “big creative ideas”.
Also important in SSL’s strategy is keeping marketing and innovation separate from each other. Watts says this ensures that innovation is not hamstrung by the activities and plans of marketing and, conversely, that brands are protected from over-zealous innovation when they need to be carefully managed and protected.
Brooksbank will admit that more emphasis is being placed on accountability than ever but he says he doesn’t consider marketing budgets to be at risk. “I think there is an increasing focus on the return on any financial spend. But as a consumer brand, we understand the importance of communicating with consumers and that does not decrease during a recession.”
Similar to the experience cited by many marketers, technology is becoming increasingly significant to Brooksbank.
“We have recently relaunched one of our websites and really view the internet as being increasingly important in terms of communicating to people,” he says and adds, “But by the same measure, we’re also doing more and more in-store, because we realise that’s also a very good way to communicate to people.”
Brooksbank says he finds some of the results of the CIM survey encouraging: “Some of the areas covered are heartening. Six months ago, consumers’ view of the economy was at a very low ebb, but since then they have begun to look to the future more positively. However, there is still concern in marketing departments.”
Guided by separate research data he has recently seen, Brooksbank agrees there is less uncertainty out there. Even if marketers are unable to see the green shoots appearing just yet, they are certainly able to plan better to deal with issues rising from the economic climate.
He observes: “From my perspective, consumer confidence is at a low rate but it is bottoming-out. I believe things will get worse but in the longer term, will start to improve.”
Brooksbank concludes that consumer behaviour is “certainly changing” as a result of the recession but far from being discouraged by it, he thinks the marketing industry needs to take heart from it and spot new ways of working. For him, the recession not only has challenges but presents “all sorts of opportunities”.