Why marketing is going to feel more pressure to "produce"

01/19/09 10:28 AM

Like consumers and homeowners, America’s corporations binged on easy credit when times were flush, racking up huge debts. Now the bills are due, and paying them back will not be easy, or cheap. This year alone, more than $700 billion in corporate loans will come due, according to Standard & Poor’s. That is the size of the federal bailout of the financial sector. Many companies were counting on being able to borrow more money to meet those obligations and kick their debt farther down the road. But with the credit markets still tight, corporations are being forced to pay much higher interest rates than they did a few years ago, putting more strain on balance sheets already hammered by falling profits and a grinding recession. This means that more cuts are coming to corporate America and marketing is going to hit and hit hard.

“I remember a time when banks lent money to people. Now it’s the other way around.” What is going to infuriate so many people is that federal bailout money is not being used to ease credit. “Right now,” said David Smick, author of “The World Is Curved,” “the bankers are sitting on mountains of cash, including our bailout money, because they know their true balance sheets are a disaster — far worse than publicly stated.” The situation will likely worsen as delinquent consumer and auto loans are piled atop bad mortgages. “Obama needs to inject some truth serum into the banking discussion. No one trusts the banks, and even the bankers don’t trust each other.” Bringing clarity to bank balance sheets, said Smick, “is the first step to fixing America’s bank lending problem.” The banks are not lending because they know their balance sheets are loaded with future losses and they don’t have enough capital.

So your company is going to have to pay more interest on any loans on the books. They are going to have to put on hold any plans to obtain new capital to make investments in the business and the axe is going to come out again and again as more and more departments are asked to cut budgets to try and make the numbers look reasonably good.

Forget, for the most part, about social media programs. Marketers are going to need to implement programs that have a clear ROI now, not later. Marketers are also going to have to become more resourceful when it comes to obtaining information. The days of paying $2000 or even $795 for a market research report are quickly coming to an end. Online media will be scrutinized as never before and offline media is going to be cut as evidenced by the availability of spots for the Super Bowl even though the big game is only 2 weeks away.

It costs money to invest in a social media program and most of all resources, all of which are going to be in short supply now. Marketing people are going to have to invest a lot of time preparing Power Point's on what they are doing and why and how it's going to add to the bottom line. It's going to get worse before it gets better President elect Obama has been telling us and right now a lot of people are in the valley looking at the mud coming down hill directly at them.

Tags: Marketing budgets, Social Media