Cutting Budgets: Reinvest It Instead

After what seemed like several steps toward economic recovery, the second quarter has shaken the confidence of some U.K. companies. Almost 20 percent cut marketing budgets. Business confidence is tuned to consumer confidence, according to the IPA/BDO Bellwether survey.

To some degree, it is expected. Last week, Diane Swonk, chief economist of Mesirow Financial, said it is likely that Europe will stay in a recession through 2011. (Report.) The United States is anticipated to recover quicker, but its recovery hinges on how many new regulations and increased taxes are passed in 2010.

The real bellwether for economic recovery, of course, isn't businesses or financial advisors. U.S. consumer confidence remains low, with a recent USA Today poll revealing as many as 54 percent of Americans surveyed believe their standard of living has not improved, when compared to that of 5 years prior. Fifty-five percent believe that things will not improve for their children.

In a different poll, just over 20 percent are satisfied with the direction of the country. The problem is private sector job creation. Even companies that are succeeding have been slow to hire new employees because there is no certainty.

The Alternative To Cutting Budgets Is Recreating Culture.

Conventional wisdom suggests that companies ought not to cut their marketing budgets. But as companies face a diminishing return on their marketing, they often feel compelled to make marketing cuts to forestall another round of layoffs.

What could they do instead? Almost every recession success story seems to have a common thread. The companies that win have successfully identified a company "culture" inside and out. They recognize that they cannot win with being faceless commodities no matter how deeply they slash prices. Instead, they rely on a culture with which consumers can identify.

• Wal-Mart. Say what you will about Wal-Mart, the company is still succeeding with what it calls servant leadership. The concept is so deeply rooted in the company that it has become part of its culture.

• Ikea. A growing global company, Ikea places its emphasis on leadership that reinforces its core values and culture. Even without knowing what is on sale, there is an immediate emotional connection with the name.

• Apple. Even as critics continually knock the company, it remains steadfast on success. The reason is simple. It focuses less on reputation and more on character or, specifically, a "culture."

• Zappos. Make no mistake, Zappos did it right. Ask anyone who worked at the company then and they will tell you. The most critical component to the longevity and success of Zappos is its culture.

So maybe cutting the marketing budget is less important than funneling some that money into defining the culture of the company inside and out. The challenge for those who recognize the need is easy to see. They don't know how.

The First Step Toward Recreating Culture.

Great communication happens from the inside out so never mind external crowd sourcing at the moment. As good as customers are at telling companies what is wrong, the people inside have to believe that they can deliver on the promises that their leaders make.

In order to recreate a new culture, it requires bringing internal stakeholders to the table and the deeper down the better. Not only do employees hear from customers day in and day out, but they are keenly aware of what can or cannot be done. Accept their input, pick from the clear differentials, and let them make that commitment before you take the message to the marketplace.

Reputation is the by-product of action, not communication. Communication and marketing merely make the promise.

For Apple it's innovation. For Ikea, it's affordable designs. For Wal-Mart, it's everyday savings. For Zappos, it's friendly online customer service. And sure, some people don't like those messages or those companies. But that is okay. Monopolies and market dominance make most companies lazy anyway.

Keeping It Real: Fresh Content Project

The buzz phrase most commonly associated with keeping it real online is to "not drink the Kool-Aid." In fact, it's used and misused so often that some people aren't always sure what it means. (Sometimes the people who are advising you not to drink the Kool-Aid serve up the same.)

The five posts below are nowhere near Kool-Aid. While the topics are broad, ranging from a simple Blogger update to how fishermen are being impacted in the Gulf, they still share a common connection. Sometimes it is not enough to listen to what people have to say about social media, you might have to take a look for yourself. After all, this is a space where yesterday's intelligence is tomorrow's ignorance. Keep it real.

Best Fresh Content In Review, Week of June 28

• Matrix: Brand Monitoring, Social Analytics, Social Insights.
Since social media is a noisy place and brand monitoring isn't sufficient (it tends to make a brand reactive as opposed to active), Jeremiah Owyang suggests that many brand monitoring companies risk becoming little more than trilobites. He rightly says that the evolution of monitoring will be to help companies derive intelligence from excessive data. That makes sense. Given that the best run companies don't give customers what they want as much as what those customers never even knew to ask for, tapping into the mindset of consumers or customers will take a bit more than simply hearing what they have to say.

• The Plight of the Louisiana Fishing Family.
Geoff Livingston brings the plight of Louisiana fishermen to life. These brave souls have been rebuilding since Katrina, many of them had finally found their footing. That is, they had, until the BP oil spill. Many of the fishing families think about how they are going to get through the crisis day to day, with most of them volunteering or accepting modest pay just to keep the oil off the shores and hope for the best next year. But next year is a frightfully long time away and at least one organization estimates that more than 47,500 fishing homes may eventually require food assistance into next year.

• Three Essential Small Business Search Marketing Trends
What are they? First, integrating online and offline marketing. Second, tapping mobile and local searches. And third, social media advertising. Those are some heavy hitting tips from Lee Odden that don't resemble many of the social media plans that have ben implemented today. On the contrary, the entire space is moving toward integration. If this is the first you heard of these ideas, you might as well mark today on your calendar. This is when many social media-only companies could start to slide.

• Are You Gambling With Your Freelance Future?
Dean Rieck went to Las Vegas and came back with some nifty tips that any freelance writer could benefit from: play your best game, know the rules, hedge your bets, play to win, and stick with it. After all, unlike the odds on the casino floor, your chances to win have much more to do with persistence than any other measure (assuming you have talent). It's good advice, and not all that different than some I shared earlier this week. You can be as creative as you want, but run your freelancing business like a business. If you do, one day it will be a business and you can pack the freelance moniker away.

• Blogger Rolls Out Real-Time Stats For All Users.
Anybody following the Fresh Content Project might find this post almost feels out of place. It's a simple update from Louis Gray that shares real time stats from Blogger, which tends to be the most beat-up platform of the bunch when anybody talks about blogging. In reality, real-time stats is just the beginning of what has been happening at Blogger. There are much more intuitive design features that give your blog a custom look (without a template), an increasing number of useful tools, and share buttons embedded into the posts (although I haven't added them here).

Marketing Pain: Should And Consequence

"Thinking about marketing causes me pressure, and the joy goes away." — Susan, Artist

The quote comes from an article I stumbled across in the Steveport Times. The cause is traceable. Too many marketing professionals (and other people too) overload their sales pitches and advice with "should or consequence."

Take the recent advice from an Internet marketing and management consultant. He provides people a choice: The Pain of Discipline or the Pain of Regret.

He says if you don't invest 10-20 percent of your annual revenue into marketing, you'll regret it when the paychecks aren't pouring in the door. Interestingly enough, this conversation comes from the same industry he is targeting with his advice.

The principle is based upon psychology. If you don't get an education, you'll regret it later. If you don't control your drinking, you'll regret being addicted. If you don't eat your meat, you'll regret not having any pudding.

Of course, the post missed one or two things in the writing. First, the nine steps to "immediate results in addiction marketing" aren't likely to cost 10-20 percent of an annual revenue. And second, if we are writing an analogy that likens marketing avoidance to addiction, we ought to consider that abrupt change carries with it a certain element of risk.

There is no should and consequence in marketing. Period.

There are dozens of questions businesses ought to ask before setting a marketing budget. Here are a few...

What business are you in? How location based is the business? What is the size of your potential audience (immediately and realistically)? What are you investing now and what can you afford? What does future growth really look like? What are your competitors doing? And what are your needs to keep the doors open?

If we use the addictive analogy, let's consider someone with a weight problem. I can tell someone with a weight problem that they "should" exercise. The consequences are a whole long list of health problems. Who knows? It might even resonate.

Based on averages, they'll be good for eight weeks before they crash and give up. The same thing can happen with "should and consequence" marketing.

Small businesses, many of them desperate in a tightening economy, ramp up their marketing budgets from 5 to 20 percent based on the advice of someone who's best interest is based on them doing so. The budget is then planned, executed, and spent, sometimes without any allotment for contingency. Sometimes it works. Sometimes it doesn't. But that's not marketing, it's gambling.

When it doesn't work out, the small business is in a position worse than when they started. And, chances are, they have less revenue (which impacts the marketing budget) and a greater disdain for marketing. We see it here from time to time. Prospects who decided to spend an inflated budget based on the advice of a big firm, only to come back without anything left and a greater need for help. Sometimes we help them anyway. Sometimes we don't.

Generally speaking, marketing is much like exercise. Sure, it's always more fun helping companies that are already fit and running circles around the competition. However, most companies aren't like that. They tend to be somewhere between a little flabby to on life support. And so, they need a fitness program that considers their goals, needs, and current situation.

For marketing firms, specifically, try to refrain from "should or consequence" pitches, especially since there is an alternative. Outline what they "could" do, measure the progress, and then adjust as necessary. Not only will it earn their trust, chances are you'll earn an ever-increasing marketing budget too.

Pimping URLs: The Fast Company Influence Flop

Shirley Polykoff, the first woman copywriter for Foote Cone & Belding, increased hair color sales by 413 percent in six years and expanded the market from 7 percent to 50 percent of all women. No one really knew her name, but her headlines can still be attributed to a Clairol campaign that some people remember despite not even being born yet. That is influence.

Fast Company: The Influence Project measures idiocy.

It was first brought to my attention by Amber Nusland on Brass Tack Thinking. She's one of several hundred blogs I subscribe too, many of which are in my reader as part of the Fresh Content Project. She said Fast Company confused ego with influence. (Close.)

Then, scrolling down the Fresh Content reader list, Danny Brown plugged the project as potentially valid, complete with an embedded link to add influence though he added a "non" add influence link too. He said it might reveal whether community trumps popularity. (Upsidedown.)

Those two post "influenced" me, I suppose, to find out more. This is the kind of thing that some of my clients ask about and I write about, so I don't have much choice. I joined, I pushed the links, and then something caught my eye: How We Measure.

So how do they measure?

1. The number of people who directly click on your unique link. This is the primary measure of your influence pure and simple.

2. You will receive partial "credit" for subsequent clicks generated by those who register as the result of your URL. In other words, anyone who comes to the site through your link and registers for their own account will be spreading influence while they spread theirs. That way, you get some benefit from influencing people who are influential themselves. We will give a diminishing fractional credit (1/2, 1/4, 1/8 etc.) for clicks generated up to six degrees away from your original link.

Seriously? Fast Company convinced some folks to fluff up a URL pimping contest with the structure of a pyramid scheme? There is nothing worthwhile that can be gleaned from the project other than what we already know.

• Most people will never read the rules of this game.
• Many people will pimp their URLs to create the illusion of "influence."
• Some people will be disgusted, delete any links, and look for the opt out. There is none.
• Fast Company has less credibility today than it did before it rolled out its pimping contest.
• Emails from Fast Company land in my spam box. Oh, right, you probably didn't know that.

So no, Mark Borden, this is not a good weird. It's a bad weird. And with the exception of a November punchline for a joke that has already been told before, nothing remotely like research will come out of this "experiment" except perhaps a new social media superstar. And that poor soul may likely be embarrassed.

Real influence is a function of authority, credibility, and ideas. And real influence cannot be measured exclusively online.

“I'm sick of just liking people. I wish to God I could meet somebody I could respect.” — J.D. Salinger

Of course, you can discount that and accept the new explanation. It isn't an influence project. It's an editorial investigation. Ironically, all the lead up to the explanation is supposedly tied to an experiment I ran months ago.

Flipping Terms: Freedom In Retrospect

"Those who expect to reap the blessings of freedom, must undergo the fatigue of supporting it." — Thomas Paine

In relation to population, Common Sense, written by Thomas Paine, had the largest circulation of any book in American history. It set the tone for the United States Declaration of Independence, arguing that all men are created equal six months before the principal author, Thomas Jefferson, wrote in the explanation of the colonies' decision to separate. It was adopted on July 4, 1776.

The above quote, which I shared across my social networks during the long weekend, elicited an interesting response from my friend Chris Stadler, who asked if the concept of freedom I was referencing had changed over the last 234 years. Many people today, even those who are uncertain of which country the United States declared its independence from, believe it to mean freedom from responsibilities. Specifically, the right not to worry.

Flipping The Definition Of Freedom.

Flipping the definitions of freedom and security is relatively easy to do. And to escape the trappings of politics, let's consider the zoo, which is a park or institution where animals are kept, bred, and exhibited.

By the definition of some, these animals must be the most free on earth. All of their meals are provided, fairly distributed based upon the energy they require. All of their health care is free, with regular preventative care. All of their decisions are made for them, ranging from what to eat to when they sleep to what they play with for the enjoyment of passersby.

They want for nothing, these animals. No predators can harm them. And nowadays, most live longer.

However, most zoologists admit that while they can provide a good and caring quality of life for the animals, one can only guess whether or not any particular animal would be happier in the wild or not. By most measures, it depends on the animal.

And with that in mind, for the purposes of this thought experiment, imagine if some of the animals could let us know. And let's say, a certain percentage of these animals told us that they would, indeed, prefer a harsher risk for the thrill of the hunt or the run. The zookeeper might be faced with a curious choice.

If specific animals are responsible for the revenue generated by the zoo, should they be let go and all the remaining animals forced to get by with less? Or, do they have an obligation to stay for the good of the community they were born into or adopted by? And since whatever rare attributes they possess are vital to the collective good, are theyrequired to accept the quality of life chosen for them, which by a different sort of parameters offers them more freedom, not less, despite the burden of captivity?

Indeed, under the flipped freedom thinking, the obligatory model holds. It did in 1776 too.

Leading Up To Independence.

Americans tend to learn about the American Revolution from the perspective of Americans. It makes sense, but there is a succession of steps that lead up to disenfranchisement of the people, with most of those problems related to policy.

Great Britain wasn't necessarily trying to be cruel to the Americas, at first. It had borrowed heavily to finance the Seven Years War (called the French and Indian War in the Americas), and doubled its national debt.

Since all countries must eventually address liabilities, Great Britain began levying more taxes to pay for the debt. To collect these taxes, the government had to create and expand bureaucracies, which required additional taxes to support it.

The new bureaucracies, afforded more power by Parliament, did what they do best. They increased regulations, which inflamed the increasing tax and debt problems. And, as justification, viewed the increasing taxes and regulations as just, given the obligation of its citizens to share in the costs associated with its decisions, perhaps bad ones.

The end result, from the perspective of the various colonies, was a central government encroaching on the prosperity and autonomy of the various colonial charters and the citizens who resided there. However, that did not matter to the central government, which felt it had sufficient power and authority to bind the colonial states to its will.

Many of us know what happened next. It led to the writing of the Declaration and Resolves of the First Continental Congress, a document written two years prior to the Declaration of Independence but much lesser known in that it was an attempt to reconcile increasing taxation and central authority.

The similarities of our current course are startling, with one exception. A greater percentage of people elect to live in a zoo. And there seems to be an increasing number of people inclined to round up the rest who prefer to run loose. It's for their own good, naturally.

Understanding Competition: Differentiate Or Die

In the midst of the last recession, I returned to Las Vegas after spending a few years in Los Angeles and Reno, Nev., rounding out my portfolio as a wide-eyed copywriter with some experience as a creative director and communication consultant. No one was hiring.

At the time, online marketing was only imagined. Public relations firms weren't taken seriously. And advertising agencies were laying off professionals with much more experience and, frankly, better books. The freelance market was extremely competitive, especially with an influx of Los Angeles creatives keen to the idea that Las Vegas was weathering the economy better.

The challenge was simple enough. If I wanted to break away from the part-time job I picked up to pay the bills, I had to find a way to compete. Book-to-book, I couldn't win.

It wasn't that their samples were better, per se, they simply had more of them. And, in many cases, their account experience was much sexier. When you place a Porsche advertisement next to a power company, most marketers would pick the Porsche, never mind any campaign results. So, I had to make a choice: differentiate myself or watch my early career wither on the vine.

Five Steps To Differentiate Your Business.

1. Listen To Prospects. As an upstart freelancer, I couldn't afford a market research firm. So, I did the next best thing. I called every agency but never pitched them. Instead, I asked for input. I asked them what they hated about freelance writers.

2. Identify The Difference. They told me precisely what bothered them. Freelancers in this market, they said, were unreliable (here today, employed tomorrow); adjusted their rates based on the client (small shops paid less, big shops more); didn't always meet deadlines (the feast-famine nature of the business); were too specialized (agencies need generalists); and attempted to nickel and dime clients on revisions (two-hour jobs became ten-hour jobs).

3. Embrace The Difference. Got it. Don't do all that stuff. More importantly, make it a proactive message. I opened one of the first generalized writing services firms (permanence) with consistent pricing (transparency); guaranteed deadlines (authenticity); and built revisions into the estimates, charging less if the job took less time (meet expectations they didn't even know they had).

There were a dozens other reinforcements, but the point is made. These differentials set the stage for one thing — the first assignment. The rest has to be earned.

4. Deliver On The Promise. Messages are not enough. You have to deliver on the promise and exceed expectations on the core competency, in this case, writing services and creative. If you could win the first assignment and then deliver award-winning, results-driven copy and creative, there would be less reason to look anyplace else until the market changed.

5. Solidify And Evolve. Branding is a function of the actions you take, which underpins the relationship between the client and product or service. But like all relationships, personal or professional, they change over time. You always have to look for ways to keep the spark in the relationship alive with innovation. Our expansion focused on strategic communication and, later, social media.

Strategic Thinking Doesn't Consider Size.

The story might be tied to a small firm, but the principles apply to any size company. AT&T has more coverage area; Verizon is more reliable in key markets. Apple owns innovation; Microsoft, the industry standard. Google mostly owns search; Facebook took social. FedEx targeted corporate; UPS captured retail. Amazon owns a platform for buying; Ebay, a platform for selling.

Differentiation is everywhere. It even came up as a topic raised by Jay Ehret, host the online radio show Power To The Small Business, during taping last week. Ehret proposed that if your company is trying to be better, it often becomes the same.

And if it becomes the same, I might add, your product or service will likely die. Sometimes it will die quickly, the result of the competition crushing it with more visibility or a broken brand promise. Or, sometimes it will die slowly, with the only differential being price until the price becomes so unprofitable that someone goes bankrupt or is bought outright.