Jan Leow's Press Blog

How’s the economy?

A lot of things whiz by very fast nowadays. If Einstein space-time theory is anything to go by, time seemed to have speeded up. I found myself with less time to do just about anything; having to squeeze in time a little here and a little there to get things done. No wonder people we are getting so stressed up in life!

Chinese New Year went by so fast and before you know it, it is over. Workload was getting heavier, and commuting to and fro from office was like a nightmare. Not to mention the gloom and doom of an impending world recession no thanks to US subprime rate crisis. It has made corporation spending much cautious. And with cautious spending means less money circulating in the economy. Less amount of monetary movement is like a constricted artery choke with cholesterol leading to pulmonary economic heart attack.

No thanks to the cautious economy, the first thing that get slash is the marketing budget, which is a stupid thing to do for most company. Top management are always concern about cost and since marketing department usually couldn’t quantify that their work is contributory to the well being of a company usually get the axe on its budget first. Most inept top management will do that due largely to their ignorance of marketing principals. Heck, many a top management did not even know the difference between sales and marketing.

By slashing the marketing budget, meaning cutting down on advertising, public relations, publicity event, it will look good at first in the forecast budget, but in reality the company is going for a sales suicide. How so?

Let’s put the scenario: a slowdown in the economy sees a lower sales in a company. In order to meet budget, management decided to cut cost by cutting down on marketing budget. Though it looked good in the accounting figure, marketing wise, the company got less exposure in the general market. It is a case of out of sight, out of mind. So consumer become less aware of the existence of the products and services offered by the company. Which means lesser sales. Which in turn made the management cut more budget to meet their required target. A vicious cycle of cutting and pruning but not making any improvement because management did not see the implication of slashing marketing budget.

Do not forget, it is marketing that brings in the revenue. Without marketing to promote the goods and services, company sales can only go downhill. On a bad economy, sustained promotion may not improve sales as much as in good times, but it does help to maintain sales and keep the company brand in the market. And if competitors also did the stupid thing of slashing marketing budget, the company that maintained the budget will get ahead by being in the hearts and mind of the consumer, ready to capture a bigger market share when everybody else is retreating away from the market.

So much for marketing principals in an uncertain economy. Already the reduction of marketing and advertising promotion was being reduced. It could be felt in the cyber world as well. Take Google adsense for instance, many publisher report that revenue was down by as much as 50% even though the traffic volume was still the same or increasing. The possibly it seems was that advertisers are slashing their advertising budget, and thus they were bidding less to advertise on Google adsense. The theory seemed plausible. As publisher depending on advertising revenue to maintain the website, that’s very much bad news. There isn’t anything much webmasters and bloggers could do but to sit tight until the economy improves or find another alternative means of generating revenue from the website.

Let’s hope the economy would pull itself out as soon as possible but in the meantime, some contingency plan would have to be in place should the income not meet up to expectation.

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