THE FROM LINE EXTENDED: Recession—Bad for Marketing, Great for Email Marketing

Waking up Tuesday morning to CNBC’s Becky Quick telling me the Dow Jones Futures were down almost 600 points after a surprise three-quarter point Fed rate cut really put a damper on my day. As I watched the real-time chart tick lower, my stomach started to knot leaving me in a dizzying stupor. It’s times like these that bring me back to my days as a small cap equities analyst where I would question CFOs about where they planned to cut and by how much. The first answer out of their mouths was almost always “non-revenue generating jobs,” such as customer and administrative support. The second most common answer is “advertising and marketing.” The second answer always baffled me especially from companies that aren’t leveraged. In a time of a recession, companies with access to capital have an unusual opportunity to take market share as they are able to sustain or increase their marketing budgets. Whenever a CFO with a decent to strong cash position told me that he or she was going to slash their marketing budget going into an economic downturn, I eventually sold the company’s stock and bought a competitor’s that kept theirs intact. This strategy worked well—especially in the services sectors.

Although most people do suffer from a recession, winners do emerge and I’m confident that email marketing could get a gold medal. During the 2001-2002 recession, email marketing was just on the cusp of becoming widely adopted but had yet to make the necessary penetration to become a formidable part of the promotional mix. Most notably, the cost per email hovered around $0.05, way below the cost of a direct mail piece yet still prohibitive for most companies to implement two or three times a week on a large scale. Fast forward to 2008, email marketing is now one of the least expensive marketing channels, and according to the DMA, a very high performer. Today, most email marketers are paying under a penny per email, but email marketing only claims a small part of the average marketing budget. Even though email marketing has become widespread, email marketers, on a larger scale, are still not leveraging the medium’s true potential such as advanced personalization, delivery monitoring and management, and integration with third-party systems.

This gap, coupled with a potential economic downturn, presents a unique opportunity for email marketers to lobby their CEOs and CFOs for a larger slice of their marketing budget. Email marketers have already proven that email marketing works well. Now is their opportunity to reclaim it as the most relevant push channel available and the biggest bang for the buck.

—Elie Ashery of Gold Lasso

–>Read other posts in The From Line Extended series.

3 thoughts on “THE FROM LINE EXTENDED: Recession—Bad for Marketing, Great for Email Marketing

  1. Great point. Recessions are a normal part of the cycle of capitalism, and help trim the fat from companies that might have got a little unfocused. We in the email marketing industry are lucky to have a product which has a clear and positive ROI. I think the industry should emerge stronger from this downturn.

  2. Unfortunately many companies follow the path of expense cutting in times of economic downturn. Research from the American Business Media has found that companies maintaining or increasing their advertising investments in periods of economic downturns also increase their sales and market share, both during and after the downturn. The key now is for marketers to make sure the CEO understands the full value marketing brings to the business and the importance of maintaining or increasing marketing investment during down times. Email marketing certainly delivers bang for the buck but you don’t want to be left with a budget that covers just email.

  3. Chris,

    Absolutely! Your budget can’t consist of email alone however most marketers agree that email is an under budgeted channel and now is a good time to increase it to proportionate levels.

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