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A regularly updated resource of information and news items.

Posts Tagged ‘Recession’

Recession: The Mother of Innovation?

Posted Thursday, September 3rd, 2009

Our special report looks at innovative ways businesses can turn the troubled economy to their advantage

BusinessWeek, July 22, 2009

Necessity may be the mother of invention. But could a recession be the mother of innovation? After all, many of the world’s enduring, multibillion-dollar corporations, from Disney (DIS) to Microsoft (MSFT), were founded during economic downturns. Generally speaking, operating costs tend to be cheaper in a recession. Talent is easier to find because of widespread layoffs. And competition is usually less fierce because, frankly, many players are taken out of the game.

Recessions can also help executives figure out how to improve products, services, and processes internally and for customers. Ideally, the creative thinking that’s needed to weather the storm of an economic downturn can lead to new markets and revenue streams. “Innovation originates from challenges,” says Vineet Nayar, CEO of HCL Technologies, a Noida (India)-based global IT services company.

HCL recently partnered with Xerox (XRX) to provide tech support for corporate customers using Xerox systems meant to reduce the amount of wasted paper. The systems themselves were inspired by the dual challenges of helping to save the environment and the need to slash office expenses during the downturn.

Inventing cost-effective and time-saving processes becomes a priority in a downturn, and it’s an area of interest for companies and organizations in a variety of fields, from high tech to health care. “In a recession, you can innovate to be more efficient,” says John Kao, author of the book Innovation Nation and the head of Deloitte’s Institute for Large Scale Innovation.

Lessons to Be Learned
Sure, there have been some signs lately that the economy might be picking up—Apple‘s (AAPL) quarterly profits jumped 15%, for instance. But a recent survey by consulting firm Bain & Co. found that 60% of 1,430 global executives polled expect the current recession to last through 2010.

And smart companies will continue to apply the innovation lessons learned during today’s tough times even when things pick up. The innovative processes, products, and services that hatch now can help executives understand how to curb costs or take risks on fresh ideas when the economy rebounds.


Claire Beale on Advertising: Whisper it, but it looks like we might survive

Posted Wednesday, July 15th, 2009

The Independent,  13th July 2009

Eavesdrop on any adland lunch table chat right now and you’ll find that confidence is creeping back onto the menu. We’ve hit recession‘s rock bottom and now we’re on the (slow) bounce. And it’s not just wishful thinking. We have facts.

OK… not facts exactly, but forecasts. And for an industry built on flimsy research, that’s good enough. A new report predicts that the ad industry will enjoy “mild global recovery” in 2010. Whisper it, but it looks like we might survive. Of course, this year will be a bloodbath. According to the new ZenithOptimedia study, worldwide advertising spend will slump by 8.5 per cent in 2009, and that’s worse than Zenith was predicting just a few months ago.

But the medium-term prognosis is better. By 2010 we’ll be revelling in a 1.6 per cent upturn. Yes, that’s 1.6 per cent against this year’s disastrous crash, but still we’re bottoming out. And 2011 is expected to be another 4.3 per cent up. It seems that although advertisers in the finance, automotive and business travel sectors slashed spend, retail and FMCG advertising (particularly at the value-for-money end of these markets) has held up better than expected.

But are we ready to capitalise on these first fragile signs of recovery?

Are we ready to remind the international advertising world that Britain is the place to come for first-class creative work, production facilities and strategic thinking? Some help driving that message home would be nice. Perhaps London‘s mayor Boris Johnson could take a lead from New York‘s Michael Bloomberg. Recognising the economic value of New York‘s communications businesses, he is on a mission to give his media industry all the help he can.

Here’s what Bloomberg‘s doing; listen up Boris. He’s launching a Media and Tech Fellowship to help fund new businesses and new innovations. Then he’s introducing tax exempt bonds to help companies invest in new technological, research and production facilities. He’s creating a New York City Media Lab to help the city’s businesses and universities collaborate on research and insight and to provide a space for lectures, debates and networking events.

There’s more. A new training programme will help equip people for jobs in new media, and in lower Manhattan, a building is being prepared as a centre for media freelancers, with workstations, conference space and news facilities. Bloomberg is now scouring the globe to encourage businesses in the communications industry to locate to New York.

It reminds me of a story I heard recently from a Canadian ad firm looking to expand into Europe. Should they choose Amsterdam or London for their HQ? In Amsterdam the city grandees threw a party to introduce the agency to other businesses there, prepared a bespoke start-up pack jammed with invaluable advice for a company new in town and pledged plenty of practical support if the agency decided to move in. The agency found no such welcome in London.

Amsterdam, you see, wants to be a global centre for creative excellence. So guess which city the agency chose for its European base, guess where it’s now creating jobs, spending money, making great advertising. Not London. Johnson’s office is apparently doing a sector analysis of all major industries in the capital so it can work out how best to support them. Hmm. And there have been a few mutterings from the Government about the need to push “Creative Britain“. But advertising and the wider creative industries need practical and financial support right now.

Britain is clinging to its reputation as one of the globe’s leading ad markets, and it’s still a hotbed of talent, innovation and creative excellence. But with our rivals upping their pitch, our grip is slipping. Without more government support, our little green shoots will remain just that while the world’s other leading ad markets invest their way to recovery.

Best in Show: Hula Hoops (Publicis)
Often the best ads are the ones that take a real brand truth and do something funny or surprising with it. Take Hula Hoops. Don’t deny you do that thing of putting them on your fingers.

Well, now Hula Hoops’ ad agency, Publicis, has launched a campaign showing people doing just that, and turning their Hoops into little puppets. In one ad these puppets are the Village People, dancing to YMCA, in another they are a DJ with a mixing deck. Make your own Hoop puppet film, post it on the website and try to win a trip to Hollywood. Or you could just eat them.


Mercedes Campaign Focuses on Image, Not Recession

Posted Friday, June 19th, 2009

Car companies like Hyundai and Ford have been showing solidarity with consumers recently, running ads promising that the companies will help them should they lose their jobs.

The New York Times, June 18th 2009

Mercedes-Benz USA is trying a different way to get customers to buy cars as it introduces its updated E-Class Series. The ad campaign for the midsize car, available as a sedan or a coupe, is the company’s biggest in two years, estimated at $75 million. It does not talk about great value or good deals. Instead, it focuses on the cars‘ technology and heritage, a somewhat standard approach for the brand.

“Everyone has that trigger that’s going to get them out there in the marketplace again, assuming that they have the means and they’re just choosing not to spend it,” said Alex Gellert, the chief executive of Merkley & Partners, part of the Omnicom Group, which created the Mercedes print and television ads.

The E-Class update is meant to turn around an alarming sales slide for Mercedes, which is owned by Daimler. Its United States sales have declined 28.7 percent this year from the same time in 2008, according to the company. May sales were even further off, falling 33.4 percent from May 2008. The United States turned in the worst showing of any geographic region in May.

Even given the sales challenge, Steve Cannon, the vice president of marketing for Mercedes-Benz USA, decided not to echo the recession-conscious marketing that other car manufacturers have used. Hyundai promised to help customers pay for their cars if they lost their jobs, an offer Ford and General Motors soon matched. A recent spate of ads for Honda‘s Insight described it as “designed and priced for us all.”

“I’d rather tell our brand story, our innovation story, our value story, than join the chorus of everyone else that’s screaming ‘sale’ – that’s about the only message that’s out there right now,” Mr. Cannon said. “Customers have told us, ‘we know there are deals out there,’ so just getting on television with an expensive media plan and shouting, ‘there’s a sale,’ they already know that.”

Although Mercedes wanted to avoid emphasizing sale prices, it did place the starting price for the cars at the end of each television spot and in the print ads. At $48,600, it is almost 9 percent less than the starting price for the last set of E-Class cars, from the 2003 model year. The ads give just the price, though, not the discount. “For Mercedes-Benz customers, $48,600 is a huge value story, and those people know it, so I don’t have to go out and say, ‘value, value’ — that’s not appropriate for our brand,” Mr. Cannon said. “The folks that are looking for a midsize luxury sedan kind of understand the price points.”

For his customers, “I think there’s a level of crisis fatigue and recession fatigue out there, marketing down to, ‘we feel your pain. We’re all in this together,’ versus, ‘this is who we are,’ ” Mr. Cannon said. “All the things that mattered to them before the recession, it still matters to them. But we have to work harder to break through, because the system has been shocked significantly.”


Advertising in a Bad Economy

Posted Thursday, June 11th, 2009

Why You Need to Advertise in a Recession Now to Grow Your Business in the Future
About.com

In a recession, the first dollars that a company usually cuts come from the advertising budget. Advertising in a recession is actually a smart business move to grow your business now and for the future.

McGraw-Hill Research conducted a study of U.S. recessions from 1980-1985. Out of the 600 business-to-business companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256-percent growth by 1985 over their competitors that eliminated or decreased spending.

American Business Press analyzed 143 companies during the economic downturn back in 1974 and 1975. Companies that advertised in those years saw the highest growth in sales and net income during the recession and the two years that followed.

The numbers aren’t a fluke. They prove there’s a reward for companies who are aggressive with their advertising efforts in a recession.

Here are even more reasons why you need to advertise your business in a bad economy:

Your Competition Won’t
Most small businesses have a limited advertising budget. During a recession, it’s easy to make up some of those dollars by holding back on advertising.

All that really does is open up the marketplace for that company’s competitors. The presence the business has spent ad dollars on to build up is now an open field for the competitors that are willing to advertise.

Let’s say you own an auto parts store. Consumers still need your company, no matter what the economy. Cars still break down. They still need windshield wipers and people will even buy those tree air fresheners. Your company can be the one the customer chooses because you’ve made your own presence known.

You Can Create a Long-Term Position for Your Business
Standing out in the marketplace is hard enough when you and your competition are battling it out in the ad world. As your competition cuts back on ad spending, your advertising can cut through that clutter.

Consumers may not be spending as much but they are still spending. If you’re not the company they think of when they do spend, your sales will decrease. While your competition is cutting back, you have the chance to be the company consumers spend with now while gaining their future business as you continue to advertise in good times and bad.

To Establish an Advertising Contact
This is the perfect time to establish a relationship with the person you’ll be doing business with at TV stations, radio stations, magazines, online, etc. An Account Executive can be your go-to contact to get your ads in prime placement, negotiate good deals on rates and even get extras thrown in for your ads.

You can also use this new relationship to further grow your business. Talk with the AE about sponsorships, advertising trades and partnering.

Get Better Deals on Advertising
This is where you can use your new advertising contact. Ad inventory still has to be sold. TV stations, radio stations and magazines still have budgets to make.

Now’s a good time to get deals on your ad space. You can get more exposure through more ad placement and even freebies added into the mix. If you’re trying to get airtime on TV, for example, a station might also offer online advertising on its website as part of the deal. Negotiations are easier for the advertiser in a recession.

You Can Speak Directly to Customers Looking for Bargains
Don’t be afraid to address the bad economy in your advertising. Customers are looking for good deals. Some national advertisers are a prime example of this.

Travelocity aired a simple commercial to announce its Silver Lining Sale. In the first three seconds, you see the words, “We know times are tight.”

Wal-Mart is running an effective ad campaign. The commercials don’t say, “Hey, come on out. We’ve got electronics, clothes, sporting goods, prescriptions and more at a low cost.” Instead, the ads focus on very specific items and how much you’ll save over a year by purchasing these items directly from Wal-Mart. The world’s largest retailer posted its best sales performance in nine months, with a 5.1-percent sales gain in February 2009 as a result.

Hyundai‘s ads touting the Assurance Plus program is another example of an advertiser that’s not ignoring these tough economic times. In its ads, Hyundai announces its program that will pay your payment for three months if you lose your income. If you still can’t pay after three months, take your car back to the dealership.

Is it an effective program? Hyundai has already seen a 4.9-percent sales gain as of March 2009 while Toyota is down 36-percent.

In a bad economy, there are many opportunities to expose your business to new customers that aren’t always possible in a good economy. Every one of them can be explored to help you solidify your place in business and stand out from your competitors.


 
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