VARs have slowed marketing spending during the down economy despite advice from experts to do just the opposite. But spending less money doesn't necessarily mean reduced marketing -- just a new approach to getting the job done.
Many solution providers may be refocusing their marketing plans to spend on less expensive, nontraditional campaigns that show a clearer return on investment (ROI), according to a new study by Gartner Research.
In the study "Channel Marketing: 2009," which surveyed 124 members of the Linked In group IT Channel Alliance, 44% of respondents said they had decreased their marketing spending, while another 26% said their marketing budgets had remained the same. Only 29% of respondents actually plan to increase spending over 2008.
"I was surprised more weren't willing to increase their marketing budgets and get more aggressive while some of their competitors might be pulling back," said Gartner Research vice president Tiffani Bova, author of the study. Bova is also an active member of the 1,400-member IT Channel Alliance.
Bova points out in the report that continued lead generation during down cycles in spending is crucial, but she also notes the need to rethink marketing strategies. "When spending increases, those who have kept top of mind share will be first to win," the report says.
For now, companies like SOS, a Loomis, Calif.-based solution provider, are looking to better utilize the resources they already have without increasing marketing spending for 2009.
"The right answer is everyone should increase marketing in a down economy. Here's a real-world issue: Not everyone can afford to. SOS has moved toward a more grass-roots type of marketing approach, utilizing our reps more," said SOS CEO Gia McNutt. She added that the company is still doing basic direct mail campaigns, but in smaller volumes.
VARs back away from trade shows
The move toward "grass roots" means many partners are pulling out of expensive, traditional advertising campaigns and trade show participation since neither presents clear ROI. In the survey, 38% of respondents said they would cut spending on trade shows, and another 35% said they would cut spending on advertising this year.
"The difficulty with traditional print advertising and trade shows is that although they may be great for brand awareness and face-to-face contacts, without a robust lead-tracking system attached to the activity, the real value is without validation," Bova said.
With a stronger focus on results, a significant number of partners still plan to participate in smaller industry events. In the survey, 20% of respondents said they planned to increase spending on regional or specialty events, while only 11% said they would increase spending on trade shows.
"Rather than attending a trade show that might be focused on brand awareness or brand building, we are focusing on shows where decision makers are going to be present," said Jeff Krevitt, marketing director of Gold Systems, a Boulder, Colo.-based solution provider.
Sharing the love -- or at least the marketing dollars
Even as companies slash spending, they can't afford to do away with lead- and demand-generation campaigns, so many solution providers are launching joint marketing campaigns with complementary companies. According to the report, 35% of respondents said they would spend more on "joint demand generation."
"You can cover more ground if the marketing budget is being shared," Bova said. "This goes beyond just vendor to channel partner. It is relevant for vendor to vendor, vendor to distributor and vendor to influencers. Any way an organization can fund marketing activities using 'other people's money' is a great way to stretch a limited marketing budget."
To do just that, Gold Systems partners with other VARs and integrators in marketing campaigns. "We work with a lot of systems integrators that, for example, might be specialists in [Microsoft] Exchange systems integration, but they're not experts in voice or PBX. That's what we provide, so we can complement each other," Krevitt said. "This was something that we focused on before, but [the economy] puts a new urgency into it."
For SOS, these partnerships go beyond cost-efficient marketing into offering cheaper joint solutions.
"We partner with a carrier services company, Infinium Communications," McNutt said. "Between the carrier savings we get through Infinium [and] our telephony solutions, both premise-based and hosted, we are able to save customers 20% to 60% on telecommunication costs monthly. That gets folks' attention."
VARs focus on up-selling
It has been said that in a down economy, it is easier to up-sell existing customers than it is to tap new ones. Not every partner agrees completely with that tactic, but few are missing the chance to stay in constant email contact with customers to present potential opportunities.
"We do two email blasts to the entire contact database [per month], and we also send out some targeted emails that come; assigned account managers to avoid driving people crazy," said Bruce Campbell, vice president of marketing and sales with Clare Computer Solutions in San Ramon, Calif. He added that the company has sharply increased its marketing efforts this year, only to find weaker results with more effort.
SOS has also focused heavily on targeting existing customers through email and e-newsletters.
"Without a doubt we continue to e-nurture our prospects/customers with our monthly e-newsletter, invites to events, etc. And we make informational content available to our contacts at no charge," McNutt said.
Whatever the marketing approach, Bova urges partners to remember that giving up is not an option.
"The balance between adhering to the 2009 marketing budget while at the same time investing in future growth is a tough position to be put in for any channel marketing manager," Bova said. "There are ways companies can continue marketing even with reduced budgets if they are willing to get creative, leverage more online vehicles, and invest in more existing customer campaigns."