Advertising in a tough economy

Should one cut or increase on advertising expenditure during an economic meltdown as we are experiencing right now?  When it comes to small businesses and web design that same question can be rephrased to “ should I increase my Google Ad spend / spend more time on my website content / trying to get quality websites to link to my website?

As is expected from a good sales person my definite answer would be: “Yes! Of course you should consider advertising more, spending more.”

Monday 24 August 2015 saw the South African Rand hit an all time low against both the pound and the dollar. The general consensus is that this can be ascribed to a slow down in the Chinese economy. While even seasoned economist are baffled at the extent of the freefall of the rand let me explain to you why you should consider increasing your advertising spend.

When it comes to small and medium businesses spending time on your website equates to spending money as the old saying goes: “time = money”.

What is in store for the South African economy following the drastic weakening of the rand? The weak rand will see input costs across all spheres of life increasing. Economists have been warning against imminent job losses in South Africa. Personally I am not sure that we have seen the worst. We have the Greek debt crisis with no viable solution in sight. The world sure is in for a shaking of the financial systems as we know it today. When even the most seasoned economists are baffled what can the ordinary man in the street do?

The answer is simple…

Concern you with the areas of your life over which you have control over…

In the context of advertising, websites, search engines and general marketing to be more specific it is now time to:

·         Understand how search engines work

·         Understand what you as a small / medium business owner can do to increase your organic website traffic

·         Understand how to analyze your advertising spend versus and increase in turnover / gross profit

When experiencing an economic downturn we always get in new clients who previously had the excuse that they were too busy with work that they could not handle new clients, did not need new clients. (This complacent situation obviously all changes with a slow down in the economy.)

Even during prosperous times it is wise to continue advertising. For the sake of being comprehensive I will repeat that:

·         Your time is your money ( You need to invest time on developing your website content or you need money to advertise with Google to appear on page 1 of Google)

·         It takes time to get quality websites to link to your website. (In theory this will happen automatically when you create great content but in practise you might have to ask people to link to your website.)

·         You need to realise that when advertising effectively you will gain new clients which you otherwise would not have had. (You will have revenue which would not have existed had you not incurred the advertising expense in the first place. Reinvest in your advertising spend before doing anything else. Don’t kill the Goose which lays the Golden Egg.

·         By advertising during prosperous times you allow yourself to build a client base with the best margins, where you will face the prospect of having to let go of non profitable clients. (Do you want to be known as the cheapest or the best?) (A profitable client base can carry you during tough economic times.)

Finally it could be seen as a light at the end of a tunnel but tough economic times also affects your competition. It is a time where you will see your competition closing down. If your balance sheet is strong it can be a good time for some aggressive price marketing to expand your client base.

Remember our parents and the people before them saw World War 1 and 2. Yes they saw the first men stepping onto the moon but they also saw the first atom bomb being dropped in War. Somehow they survived.

To survive during tough economic times means you have to find ways to increase your sales which means you have to increase your spend on advertising and marketing. Hopefully during the good times you managed to limit your business and personal debts. Quite often small and medium businesses fail not because of a bad business idea or due to a lack of demand of the business products and services but because of the non viable personal overhead structure of the business owners / directors.

Lastly do remember that effective websites can actually save a business owner time / money.

Francois Marais is a partner of www.buddywebdesign.co.za , a cape town based web design partnership.

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