The Rupp Report: More Attention For Less Money
Jürg Rupp, Executive Editor
This is everybody's dream: more attention for less money. More attention for less money? And I
don't mean in a relationship between lovers. I'm talking about the relationship between supplier
and customer. You might think of the chicken announcing new eggs are available.
Bang The Budgets
It always happens in the same way: When the wind is turning toward fewer sales, the financial people in a company start shouting and screaming, "We have to reduce the budgets." And then with a magnifying glass, they start to cut. And what is crushed first? Of course, the marketing budget. Financial people rarely understand communication - "Why should we advertise? Everybody knows us." The rhetoric is very well-known. So, if the "everybody knows us" story would be right, why are big-label companies spending multi-million or even -billion-dollar budgets on advertising and communication? To be present in the market, always and everywhere. Two examples are Coca-Cola® and Nike.
You might say this is related to consumer products investment and not capital investment. However, it's the same people. I remember one of my journalism professors who always said: "Whatever you are writing, and for whom you are writing, don't forget - your reader is not only reading the financial times, but also the yellow press. So think about emotion in your message or story."
Not Wishful Thinking
Now, the whole textile machinery industry may be moaning: "This is always the tenor of the press, one should act without regard for cycles. This is your wishful thinking." No, it is not. Two scientific studies from Europe have proved this marketing behavior is absolutely "more attention for less money." For example, GfK Group, the well-regarded German market research institute, examined the marketing behavior of 700 brand companies after the 2001 burst of the Internet bubble.
The results are amazing - and to me, not very surprising. They discovered companies that put more money in communication, even in bad times, gained more market share when the economy went up again. Why? Because they were always present in their special trade magazines. Thanks to this trick, Dell became - notably, in two years - one of the five big computer suppliers in the 1990s.
It is never easier to win more market share than in bad times, because your competitor is keeping silent. Why should you? Shout to your existing and potential customers that you are still alive. The same results were confirmed in a study of the Boston Consulting Group. To win market share is by far not a "from quarter to quarter story," but a medium- and long-term target.
Since last October, the CEO of the biggest sports retailer company in Switzerland has spent double-digit millions of Swiss francs in advertising. The money was and is spent in sponsoring and advertising campaigns all over Europe. He had the right idea. In the first four months of this year, the turnover has increased 6.5 percent globally. Coincidence or not? And, don't forget, the chicken always cackles when the egg is laid.
June 2, 2009