Banks and financial institutions have gone bankrupt, and stock markets across the world have nosedived at a gravity defying speed. This ongoing fiasco has resulted in losses amounting to billions of dollars and sadly has claimed human lives. The economic situation looks grim.
I am not a financial whiz kid and this blog is not even remotely related to finance. Then why am I talking about economics, banks and stock markets here? Because being an online marketing professional, I view everything with my own perspective and the financial meltdown is no exception. A looming recession will severely dampen online retail growth and online marketing spend is what most people would believe, but according to me is an untrue cliché. Here’s why…..
The National Retail Association has forecasted that online retail sales will jump to $204 billions in 2008, a 17% increase over the previous year. Considering that the economy is in recession and other retails channels will witness a sluggish growth, the projection is more than welcome news for online retailers. The growth is online retail sales would be a clear demonstration of value and convenience that most customers experience when shopping online. Across the Atlantic, the SEM spend in the UK is projected to rise by 24% in 2008. The growth rate may not beat expectation but is a step in positive direction, nonetheless.
In the last 100 years we have witnessed 20 recessions. Traditionally, businesses cut down on marketing budget during recession because they are gripped by a panic situation. More often than not, this results in a cascading effect and further pushes down the sentiment. But search engine marketing is not traditional marketing and is far more relevant and targeted than traditional marketing. Even if businesses axe or cut down on advertising spend for traditional channels like television or radio, it is time to maximize their online exposure. And there are ample reasons to do what I just said.
Recession does not mean that people will stop demanding for goods and services. People may be cash strapped and see their gas bill soaring but this would eventually mean that people would be more tempted to buy discounted products (most online retailers can offer cost benefit over their traditional counterparts) and have them delivered via post. Come what may, our consumerist society will be in a constant need for goods and services. Also, studies have established that the impulse buying behavior heightens (typically does not include items that are perceived to be luxury) when people are strapped for cash. This buying behavior is triggered by the fear of not being able to buy the same good/service in the time to come due to cash flow getting depleted.
Apart from all these obvious benefits (I am sure you can think of many more) and the positive trend projections, there are many other perceived benefits of sustaining your online marketing budget during this period. Online marketing spend is quantifiable and offers the best return on investments. Increasing or sustaining your online marketing budget (when most of your competitors would be cutting down on it) will enable to come out of this recessionary phase with a better brand recognition and a larger customer base. Apart from this, having a higher visibility during this phase would inject confidence in your customers and prospects, and remind them of the sound fundamentals that drives your business. So regardless of what is being perceived or said about recession, I strongly believe that businesses should not cut back on their marketing budget, especially online.
