Marketing Massacre

In the last couple of months we have already seen knee jerk reactions from some clients, most notably in the house building sector, who have made dozens of internal marketing staff redundant.

But those in the know claim that while it is probably true that marketing spend right across the board will be less than previously budgeted at the beginning of the year, and will probably continue to recede until the economy stabilises, few believe that it will have a long term impact on the jobs being done by in-house marketers.

Certainly marketers are going to have to work harder than ever and with tighter resources, but few have speculated that this means that marketing departments should fear for their futures.

Gordon Brown, former head of marketing for STV, who also worked as director of brands at Tennent’s Lager’s marketing team, believes this to be true.

“Some businesses will start to pull in the draw bridge and it depends whether some clients start to see it as an expenditure or if some start to see it as a investment. If they view it as an expenditure, in my experience, then it’s likely to be cut. If you view it as an investment, i.e. you’re investing in communication now for future benefit, then they are less likely to cut it.

“It all depends which side of the fence the board sits on.”

Very Tough

Brown continues to say that times would need to be ‘very tough’ or clients would need to have a poor understanding of the need for marketing – and the specialist insight its marketers bring to the brand – to feel it necessary to disband its marketing resource.

“What is most likely is that the money available to spend will be cut rather than the actual individuals themselves. If you’ve got someone with experience in the company, who understands the brand and understand the way it works, it’s shortsighted to get rid of them. Most firms are smart enough to understand that they still need to do something to attract new customers.”

Despite this, some clients have made moves to cut spend on in-house teams. It has even been reported that Coca-Cola is cutting its International marketing spend by as much as $500m over the next three years for the “long term health of the business.”

House builders, furniture companies and drinks companies are all looking to streamline their spend until they are able to grasp just how difficult times may be.

It would seem few have been left unscathed by the uncertainty currently overshadowing the financial sector and some of the world’s biggest banks.

International fashion chain Gap has made redundant some of its London marketing team and released all of its European designers, admitting that it has done so to cut costs.

A spokesperson for Gap UK said: “In the current economic climate we need to be prudent with costs so we will leverage our global products from the US.”

AXA Insurance is currently making up to 500 UK jobs redundant, which is thought will include marketers as well as finance, IT and HR staff in an attempt to save £80m over the next three years. The company only set up a marketing department in July.

Phillip Hogg, former head of marketing for Miller Homes, who was himself recently made redundant, believes that when things get tough, firms should “look after their best people, their best products and their best customers.”

He continues: “It could be argued that the people that are best placed to look after ‘the best products’ and ‘the best customers’ are indeed the marketing departments. It’s their job to have the best understanding of these key components.

“However, many businesses revert back to a survival mentality and still overlook the value that marketing brings. Crude sales techniques are often introduced that are long-term value destroying. Brand images and reputations that have taken years and thousands of pounds to build and have been carefully nurtured can be almost destroyed overnight.”

It is also difficult to see how such changes will not be felt in ‘agency land’ with clients not spending the amounts of previous years. Many agencies will be tearing up the yearly forecast with no idea what to prepare for in 2009.

Ian McAteer, group chairman at Edinburgh-based agency The Union, insists that business remains good. When asked if he had seen a reduction in numbers in marketing departments, he replies: “Not really. We are experiencing busy levels of work generally. A number of sectors, such as retail, housing and, to a certain extent, the financial sector, are down, there is no question of that, but this is due to the impact of the current economic climate.”

Decline

Natalie Round, events and PR manager at marketing recruitment firm Blue Skies’ concurred with McAteer, suggesting the trend was Britain-wide: “Generally, we haven’t seen a decline in demand for marketing staff.

“However, within the property industry we have seen an influx of clients being made redundant, and it’s not a case of ‘out with the old, in with the new’ – these clients are losing their jobs and not being replaced,” continued Round.

“Those primary industries that feed into the property market, like plumbing and heating, have also been affected.”

But she also insisted that this decline was due to the credit crunch, not a decline in the importance of marketing.

Times look tough across the board, but in order for clients to keep their brand in focus, for them to continue to compete and come out of the impending ‘doom and gloom’ ahead, they must recognise the value that promoting and marketing themselves will have, and the experience and know-how their marketers and marketing department have to see them through.