The downturn two-step
Marketing managers fight to keep their budgets in tough times

The possibility of an economic downturn is causing considerable nervousness among marketers. That's because their departments are often the first on the block when CEOs pull out their axes, a process that has already begun.

For example General Motors is reportedly slashing the US $600 million it committed to advertising on broadcast networks, and AOL-Time Warner, has reported a flat backlog in Internet ad revenues.

There's an old saying that half of all the money spent on advertising is wasted, the hard part is figuring out which half. But that saying could be extended to almost all marketing functions.

Unlike say a factory, or a telemarketing call center, marketing departments are somewhat of a mystery to corporate executives. Everybody thinks they know what's supposed to be going on there. But marketing's contribution to the bottom line, is very difficult to measure.

And since it is difficult to measure, CEOs are especially vulnerable to the smoothies who often end up heading these departments. Marketing is an ideal launch pad for fast-talking, buck passers - many of them highly schooled MBAs. These tend to be ambitious empire builders, who are accustomed to defending their budgets and staffs. In fact they play office politics like philharmonic flautists.

Marketing executives tend to speak in eloquent sounding phrases like "customer driven enterprise solutions." Also popular is rah-rah talk filled with anagrams like "TEAM: together everybody achieves more." It sounds like they know what they are doing, and often they do. So in growth periods, marketing department's budgets tend to creep upward. Usually this starts with an extra employee or two.

Often this is the fault of the CEOs themselves. It's common, for example, especially in family run businesses, for the boss to give his own kids jobs in the marketing department. Junior gets to hang around dad's company, wearing fancy suits and looking important.

Working in the marketing department gives Junior, the hint of authority he needs to watch and learn how dad's business runs, without the other employees realizing he is actually not doing very much.

But Junior is often just the tip of the iceberg. Marketing departments are also a common place for executives to stash mistresses. It's much more prestigious than say a receptionist position. Having your mistress (or mister) in marketing has the added advantage that she can be drawn away from her work as required - without anyone noticing she was gone. This would be impossible to do, if she had real operational responsibility. Marketing - and especially public relations -- employees also tend to travel a lot, which can make an affair's logistics easier to manage.

But beyond family members, buck passers and mistresses, marketing departments are also a good place to stash miscellaneous employees, those you don't know what else to do with.

For example when Vernon Jordan, a director of Revlon, was asked by his pal then-president Bill Clinton, to find a job for Monica Lewinsky, the first place he thought of, was to put her in marketing. That she had no experience in the field, nor any relevant education, was not seen as a problem, speaks to the pervasiveness of this practice.

As marketing employees accumulate, they need to find things to do, and these things often cost money. They tend to expand and develop new fancy brochures, commercials, trade shows, conduct spurious surveys and so on. Advertising and printing budgets tend to shoot straight up.

Then these already spurious employees commission marketing studies which recommend even more of these expenditures. That's what's happened to many North American companies, whose budgets have grown considerably over the last few years.

But all this fun quickly comes into serious danger, when a downturn comes, and the boss's stock options start dropping. Then, the axe hits quickly. No matter how fast the marketing vice-president talks, his department inevitably gets clobbered. And that's when the marketing-two step begins between.

Even in the midst of budget cuts, a good advertising executive is already planting seeds in the CEO's mind. These, he hopes, will allow him later to argue that maybe, just maybe, the downturn would not have been so bad, if they just hadn't cut marketing budgets so much.

 

E-mail can be sent to Diekmeyer at: peter@peterdiekmeyer.com

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