Marketing Cost Cutting in Downturn

Marketing budgets have been severely cut during the economic downturn. A recent study by the Finance Marketing Association in Vienna found that up to 60% of financial marketing departments have responded to the crises by cutting costs. Is this wrong? Not necessarily.

Looking at the dire situation from the point of view of the agencies, they should shoulder some of the blame for this reduction of marketing budgets. Why? Because in economically strong times the agencies sold anything and everything to image-obsessed CMOs and CEOs.

The main consideration seemed to be that the client manager was "happy" at the moment of campaign launch. Concerns about the Return of Investment (ROI) of such campaigns were an afterthought, if at all. Maybe they were eager to win one of the prestigious prizes, but it was not cash they were after.

Insightful is the fact that the only category getting more budget in the crisis is direct marketing. This makes sense, because direct marketing is much more performance oriented and supports the hypothesis that performance was lacking until now.

Also, the explanation that companies cannot "afford" the marketing budgets seems odd. This sounds like marketing is something like luxury, reserved for good times. In fact, marketing needs to be an investment. And like every investment it needs to return the cash plus a profit margin.

Taken it from this angle, the solution is quite simple: rigorous marketing controlling with pre-testing and performance measurement, based on hard data.

However, this is not an entirely new thought and many agencies would offer it to their clients. The only question then is why it was not marketed before?

Just 18% Happy With Own Leadership Performance

This result that just 18% of leaders are content with their own leadership performance was the outcome of a recent study by Dr. Seliger (PDF German). In addition, the conclusion stated two major shortcomings:

1. Leadership instruments are choosen without facts, on the basis of "gut feelings"
2. Lots of communication does take place, but it lacks plain-talking language

The consequences of this lack of performant leadership on the organizations are highly detrimental. Typical outcomes of bad leadership are: trends overlooked, growth targets missed, performance deteriorating, costs too high, employees demotivated, customers and owners disappointed, insolvency a clear danger.

The study uncovered some of the reasons, which conform with my experience. There are serious misconceptions that undermine performant leadership:

• Leadership is reduced to "charismatic" leaders, neglecting the process of leading
  
• Separation of thinking and doing, whereby the leader commands people to do (not to think, so they stop thinking)
  
• Disregard for genuine leadership work in favor of operational work (i.e. sales manager is his best salesperson)
  
• "Hero" conception of leadership versus the reality of daily housewife-type leadership chores to achieve consistent and sustainable results

These wrong myths of leadership prevent a more profound approach. What does such an approach need to contain? Here, my experience suggests not to fall into the trap to extend a "catalogue" of tasks or traits. Quite the contrary, less is more: principles come before attributes.

Sure, leaders need to follow standard work with high discipline, the core of leadership does not consist of tasks. The heart of leadership are the results delivered, which in turn means accountability for these results.

This may sound simple, but it requires the courage to define a clear vision on basis of personal responsibility. Especially in times of crisis, leaders are called upon to confront the new situation, investigate the reality and face up to uncomfortable truths. Not a job for the faint of heart.

Despite being in the center of social networks, leadership contains a lonesome responsibility and no consultant or clever method can substitute for standing up to it. Too often have we been fooled by the drappings of leaders, while the actual results then turned out to be dreadful.

Instead of impressing their stakeholders with results, these so-called leaders went through the motions of leadership only - in fact duping the public (i.e. just to mention the most famous: Enron, WorldCom, Tyco, Parmalat, Madoff, Bawag, etc.). More substance, measured in results, is needed for times like ours.

For our leadership practice we should bear in mind that your next most suitable leader may well come from a different class, a different country or a different gender than yours. But, he/she will be the one that delivers results. Take´m.

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