WPP Execs Offer Tips on Weathering the Recession
Brand Advocacy, ‘Significant’ Digital Spending and Improved Loyalty Programs Part of Mix
Published: November 13, 2008
NEW YORK (AdAge.com) — “Most people in this business don’t yet understand how hard this recession is going to hit by the first and second quarters of next year,” warned John Quelch, Harvard Business School professor and WPP Group board member, at the Marketing in a Downturn Emergency Session, hosted by WPP-owned Hill and Knowlton in New York. “It’s going to be very severe and they don’t understand how deep and long this thing is going to be,” he added.
And while those were Mr. Quelch’s closing remarks to the audience at Manhattan’s Soho House, the gathering wasn’t all about doom and gloom. He, along with a panel moderated by Michael Kelley, partner for advisory services at PricewaterhouseCoopers, featuring WPP agency executives including Marylee Sachs, global director of consumer marketing, Hill and Knowlton; Rob Norman, global CEO Group M Interaction; and Jan Jacobs, CEO Johannes Leonardo, were there to offer advice on how marketers could better manage the challenges created by the current recession.
Ms. Sachs said that while her agency has been “seeing a lot of opportunity,” it has not been without its share of issues and barriers. She believes the opportunities are coming from marketers looking to do more in the social-networking space and tap into the practice of brand advocacy.
Hope for marketers?
“Just look at what Obama did,” she said referring to the extraordinary success the president-elect had in creating a database of more than 3 million loyal followers who took action and turned out to vote last week. “So while marketers are thinking ‘Oh, my God, how do I harness what’s going on in the marketplace?’ we PR people have been doing that for years, and part of it is just having an understanding of how to manage in an uncontrolled environment. We have never had control. But when you think about the marketing mix, PR has always been the one that’s never guaranteed the coverage and that’s an irritant for most marketers actually.”
One thing she said she would like to see her clients do more of is cut back on simply experimenting in the online space and instead make the commitment and “put a truly significant spend behind their efforts.”
Mr. Norman said the challenge his clients are dealing with at the moment is turning reach, which he deems a necessity, into engagement.
“My counsel right now to clients is to look at every big investment you make, whether it’s The New York Times or NBC, and see how we can extract the greatest value engagement through their digital, event and online properties,” he said. “I think it’s important for all advertisers to get this sense of steady engagement.”
Reassessing the structure of one’s loyalty programs is also something he believes marketers need to do. He said defining loyalty in tiers based on who spends the most is not the approach to be taking during a recession.
“If someone spends $5,000 on something, are they more interesting or worth rewarding more than the person who comes in 50 times a year and spends $50 each time?” he asked. “The person who comes in 50 times a year may seem less valuable from a dollar perspective but their frequency of visits and purchases tells me two things: You are more likely to be able to sell a wider range of products to them and they are also more likely to be influencers in their community about your store. Credit-card companies, retailers and the airlines need to think about that.”
Mr. Quelch said marketers must understand that they are dealing with three types of clients — those who are frozen like “deer in the headlights” and aren’t spending; those that live for today and will continue spending; and those that have long-term plans and aren’t panicked at all by the current situation. The latter “will be your stalwart supporters,” said Mr. Quelch. “They will not derail their consumer behavior just because there is an economic cloud directly overhead.”
Mr. Quelch said it’s also a good time for marketers to “drain the swamp” and get rid of all the marginal products and brand managers who aren’t cutting it. He added that, for some marketers, it might also be a good time to introduce value brands to protect their premium products.
“Sometimes companies, especially in the liquor industry, will bring out value brands that are strictly for this type of situation,” he said. “They are aggressively priced and designed to defend premium brands in the same category from being forced to lower their prices.”
He believes social networking and positive messaging is what will help marketers strike the right chord with worried consumers.
“In a recession everybody wants to hug everybody close to them,” said Mr. Quelch. “So messaging focusing on family and friends is very important and that is why in this recession you are going to see huge advances in MySpace, Facebook, YouTube and LinkedIn. All of those sites are about networking and staying close and that is what people want to do when they are uncertain about their future.”
But Mr. Norman said he has learned to adapt to the current economic situation and readjust his goals and expectations. He has even adopted a new mantra.
“I wake up every day saying ‘not bad is the new great.'”