The Paradox of Thrift and Your Marketing Budget

People are funny. They spend when they should be saving and save when they should be spending.

John Maynard Keynes (1883-1946), for those of us who didn't take economics (or who tried and failed) was the great British sage who, in addition to helping found modern macroeconomics, advocated government intervention to ease economic disruption. Keynesian economic theories were hot for much of the second half of the twentieth century but fell out of fashion in the 1980s. With the current economic crisis, Keynes is back. One of Keynes' notions is the “paradox of thrift.” Common wisdom tells us it is good to save for the future, but what makes sense for individuals may not be good for the economy as a whole, hence the paradox. What's true of the parts may not be equally true for the whole—and that's what Keynes argued—while saving for a rainy day is good for you, if everyone is saving then no one is spending and that hurts everyone.

Which brings me to my second favorite economist—Joseph. No, not Joseph Stiglitz (also a Keynesian), Joseph from the Hebrew Bible. As you recall, Joseph was sold into bondage in Egypt by his brothers who were jealous of his standing with their father, Jacob. Joseph rose to prominence in Pharaoh's court because of his ability to interpret dreams. In Genesis 41 we read that Pharaoh dreamed he saw seven fat cows come up from the Nile followed by seven skinny cows; the skinny cows devoured the fat ones. Then he dreamed of seven healthy heads of grain and seven thin heads of grain and the thin stalks devoured the healthy ones. The dreams' meaning confounds the wise men of Egypt but Joseph accurately predicts that the dream foretells seven good years followed by seven bad years. He advises Pharaoh to put aside in local government granaries 1/5 of the surplus in the good years to alleviate suffering in the bad times ahead. Joseph was Keynes before Keynes was Keynes.

So what does this all have to do with marketing? As the economy contracts, many businesses, whether out of panic or financial necessity, begin to make across-the-board cuts. Marketing, the engine that drives brand awareness, sales opportunities, and market share, suffers as a result. The “Jospehians” among us undoubtedly put aside tidy sums during the past boom so they needn't read any further, but, like I said, people are funny. In the off chance that you were not as foresighted as Joseph, what should you do? If you are a Wall Street billionaire, don't worry, you'll either be bailed out or go to prison. Either way your daily needs will be met. And, frankly, living on one's remaining millions requires fewer sacrifices than one might imagine. Car manufacturers probably won't have it so easy and they may have to learn German or Japanese to survive. Small and medium-sized business will be even less lucky and will have to make tough marketing choices.

So where should you spend your marketing dollars? Here are three things to keep in mind:

1. Targeted marketing gets better response. The more relevant the content the better the return on investment.
2. Use resources like client databases, web analytics, and surveys to consistently craft more relevant campaigns.
3. Figure out who your best customers are and market to them often.

If you have to cut, cut wisely. The worst possible decision would be to reduce your visibility with your best clients.

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PoP Cast

Publishing guru Bennett Lovett-Graff, veteran of print and digital media talks with Jay about new technologies that can benefit your business communication.

Publishing 2.0

How do you make a small fortune in publishing? Start with a large one.

That joke used to have more truth to it than presently. Now anyone with an email account and a broadband connection can write her own magazine (blogs), make his own films (YouTube), or have a radio show (Podcast) for low to no cost. But the increased availability of resources and the explosion of platforms have also led to confusion. For much of the twentieth century, business publishing amounted to brochures given out at trade shows or white papers presented at conferences. Books were something business people wrote in retirement. Nowadays, the competition for eyes and ears is fierce. Most businesses look at their presence online as a kind of storefront or a "brochure on the web." A better approach is to think about your presence on the web and business publishing as an interconnected media empire.

There is another critical difference between Publishing 1.0, the age of paper and cellulose, and Publishing 2.0, our current Internet age. One of the biggest nuts for any marketing professional to crack is tracking response. You printed and mailed 100,000 fliers, but how many people actually looked at theirs? In a Publishing 1.0 world, tracking response and the quality of that response was difficult and expensive. In a Publishing 2.0 world, you can now track far more closely that response at a much lower cost: how many times viewers came to the site, which pages they lingered on and for how long, which products they ordered and how closely related was that order to where they lingered on the site. In a 2.0 world, you can watch consumer behavior and response at a much closer level.

Fun with Wikipedia

Check out this article on the history of printing in the Wikipedia.

Think about it; It took 3200 years for humans to advance from the use of Cuneiform, where letters are cut into clay tablets with a stylus, to the invention of woodblock printing, where images are carved in relief. Another 840 years would pass before the use of movable type by the Chinese and Koreans. The mechanical printing press took almost 400 years more. The next advance in publishing took another 357 years. In all, the average time to innovation from the ancient world to the development of mass market publishing, which I count as the invention of the rotary press, was 807 years. By comparison time to innovation in the twentieth century took approximately 11 years on average. If we look at publishing in the internet age we would see an even faster rate of change—in some cases with only months between new innovations. What are you doing to keep up?