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Join Our Research Team at DMA 2014
Oct 20, 2008
Blog Post

SherpaBlog: Sequoia Capital Advises CEOs to Rely on Marketing to Survive Downturn

SUMMARY: No summary available.
By Anne Holland, Founder

The heads of Sequoia Capital gave a CEO-only presentation on Oct. 7 that I can describe only as the ‘PowerPoint of doom’. The cover slide even had a tombstone on it.

Last week, private equity firms (e.g., Benchmark Capital) and other major investors (e.g., Ron Conway) followed suit, sending a flurry of doom-laden advisory emails to hundreds of CEOs.

Even if your company is not dependent on venture funding or on the stock market, the fallout will probably affect you. Nothing spreads faster than fear.

Unfortunately, aside from the direct marketing industry, typical CEOs have a knee-jerk reaction when they’re scared. They slash marketing.

The good news, according to CEOs who attended Sequoia's presentation, is that the firm touted marketing as absolutely critical to *surviving* this recession and even coming out stronger on the other end. Sequoia's critical action items to beat the recession reportedly included:
-> Nail your sales and marketing positioning so it's as customer-driven and high-impact as possible.
-> Go on the offensive against the competition. They're in pain, too, and it's easier to beat them when they're down.
-> Ramp up PR and marketing communications aggressively.
-> Improve measurements company-wide so you know what to cut and what to invest more in.

My advice? The most important action you can take to save your department right now is to assume control. Instead of waiting for your CEO to tell you how big the cuts need to be, be proactive. Show that you are a leader who can be counted on in the tough times ahead. Your marketing plan for fourth quarter should include:

1. Capital preservation
Even if you're budgeted to spend money, find ways to hoard it. Show the CEO where you can cut costs and control spending, especially by bargaining with vendors and media. Do what you can to preserve headcount, although you may end up outsourcing some positions. Recessionary marketing tactics are usually staff-power intensive.

2. Measurement
You desperately need more data that ties marketing activity to the bottom line. You need to know what to cut and what to increase. In B2B, lead qualification and scoring is now your top priority. In consumer marketing, devise better ways to measure the campaigns and tactics that:
- cost the most overall (e.g., video ads)
- can be done on a shoestring using staff time instead of outside vendors (e.g., word-of-mouth campaigns)

3. PR Research
Build an in-house list of every possible media outlet, especially non-traditional ones, such as Facebook groups, email newsletters published by related brands, and the blogosphere. Keep notes on each one's predilections and PR possibilities.

4. Market Research
You don't have the ad dollars to throw new creative against the wall and see what sticks. Base creative decisions on targeted research including internal site search terms (i.e., terms people use when they visit your site), surveys of your opt-in email list, A/B offer tests on PPC search, etc.

Also, consider using low-cost webinar formats to conduct focus groups. It's not perfect, but it's a lot cheaper than flying around and renting facilities. Just make sure that a true research expert devises the questions and analyzes the results. In short, invest in smart people instead of costly campaigns.

During the bust of 2001, I used to think of marketers as 'Buffy the Vampire Slayers'. Other departments may think that we are dumb cheerleaders, but we are often the only ones who can save the victim. It's time to get your Buffy on!

Comments about this Blog Entry

Oct 20, 2008 - Leigh Choate of Bazaarvoice says:
This article is spot-on. I've seen so many companies that start slashing anything they can, usually starting with marketing. You're right that measurement is critical - if you can't measure it, you can't prove (or justify) it. This could be the downfall of many types of traditional media.


Oct 26, 2008 - Mike Pilcher of Marketbright says:
Marketing your way out of the Meltdown I vehemently agree with Sequoia. We typically see three common responses to a down economy:- 1 Reduce costs and slash marketing budgets 2 Put Marketing headcount on hold and possible headcount cuts 3 (Im) Prove the results of the efforts and expenditure of Marketing I recommend the following:- 1 Get tactical - Move expenditure from brand awareness like trade shows, press, and other branding initiatives. Focus hard on those programs that directly generate qualified leads into the hands of sales people. 2 Reduce costs - Go on line, move from expensive trade shows, conferences and physical meetings to virtual ones. 3 Accelerate the pipeline – wherever you can automate a process do so. 4 Measure everything – it is easy to see the output of the other disciplines. Marketing have to be able to prove the leads the sales team are closing came from the marketing effort and budget.



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