Can a recession reshape MRM, marketing habits?

Marketing departments are feeling the pinch of the recession. It may be just the push many need to start justifying their spend.

It will be a lean year ahead for many, but marketers in particular are likely to feel much of the economic impact as staff and marketing budgets get cut.

And that may be just what marketing departments need.

"This could be the year marketers will be forced to reshape their old habits," said Suresh Vittal, principal analyst with Cambridge, Mass.-based Forrester Research. "There's no room for frivolous spend or unaccountable spend anymore. Now you'll see analytics and process automation tools be the difference."

Marketing automation and tools vendors shouldn't expect a major lift, however. There is little available budget for expenditures on new software or hardware to support marketing.

"I'm not suggesting there will be zero spend on technology," Vittal said. "But marketers' tech budgets are under threat, so unless they can really prove the business case or justify … why new tech makes more sense, they won't get the budget."

Rather, most organizations will focus on getting as much as they can out of what they have.

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"There's a lot of existing technology that hasn't been fully deployed," Vittal said. "I do see marketers emphasizing that -- getting more out of existing deployments. If they focus now on automating one or two processes, I expect that to increase to three, four or five."

It's certainly an emphasis for Miyeko Keen, director of marketing operations for Rydex Investments, who saw a 20% cut in a marketing budget that totals more than $3 million. Keen's target customers are typically brokers at Merrill Lynch or other broker-dealers. Most financial services firms are facing similar challenges.

For Keen -- who was already pretty lean in terms of staffing, with a 26-person department -- that reduction is going to come out of campaigns.

"We made some decisions that allowed us to cut out projects that we probably carried on a lot longer than we should have," she said. "What was left was the really strategic campaigns and product efforts."

Rydex is not alone. Many organizations are reducing their marketing spend for the coming year, according to Vittal. Forrester has recently surveyed direct marketers, indirect marketers and chief marketing officers.

"There's clearly a cut in budgets," Vittal said. "Generally speaking, 43% or so have less to spend this year than they did in the past."

For the past four years, Rydex has been running Waltham, Mass.-based Unica Corp.'s Marketing Central's Marketing Resource Management (MRM) application, establishing a marketing track record that could be used to target this year's budget.

"Because we had the system in place, we were able to show definitively what was working and what wasn't," Keen said. "We did a lot of segmentation over the last year and a half, personalizing our campaigns and focusing in on our market segments."

Rydex's track record with Marketing Central will pay off now. It required some learning during the first year Rydex deployed it, according to Keen, but her department is now much better with the system.

The marketing difference maker?

"Analytics is the difference maker -- a focus on process and automation tools and being able to do more with less," Vittal said. "Companies will use this time to really re-think their existing marketing processes and attach more scrutiny to how they execute campaigns."

For instance, Vittal expects a greater emphasis on reducing campaign cycle times and managing the marketing supply chain.

Rydex has used the Marketing Central System to determine which customers in its Pivotal CRM system marketing should focus on.

The advertising budget is where Rydex made the largest cuts. The company advertises both online and in print trade journals with a roughly 60/40 split.

"All the fundamental activities within marketing are going to get a re-look," Vittal said. "Customer acquisition is taking a backseat to retention. People need to hunker down and retain or preserve their existing customer base rather than ambitiously try to grow."

Keen does see light at the end of the tunnel, however.
"I think that we're going to see probably in the latter half of the year a much better understanding of what the future holds," she said. "I think we'll see a loosening of the marketing dollar not just for us but the rest of the industry. For now, we need to make very smart marketing decisions -- that's what '09 is going to be about."

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