Sunday, July 22, 2007

The macro economics side of new marketing efficiencies

The Wall Street Journal on July 2 contained an excellent story about how economists view U.S. businesses' prospects for the coming months. The story explains how businesses are facing higher energy, food, and labor costs while needing to hire more workers -- all of which mutes general productivity.

The story says:
If they can't pull off a resurgence in productivity, businesses face a tough choice: Raise prices or live with reduced profit margins. Judging from their outlook for corporate profits, the forecasters believe that many ... will choose to split the difference.
That means raising their prices some and living with lower profits, too. This is quite different from the most previous business climate where consistently rising productivity and tame inflation allowed for ongoing record profits.

However, there is another aspect to this somewhat bleak assessment. The next business cycle will demand that many companies focus on efficient top-line growth so that they can maintain profits, even as productivity slackens.

Many businesses may be constrained in how they can grow revenues, perhaps because they only supply a static region or supply a shrinking customer base. Most businesses, however, can find new ways to sell their goods and services in more places -- especially by better use of the Internet. That's because the Internet is and will continue to be a marketer's most powerful tool.

If the past business climate was about productivity as a means to profits, and the Internet was a benefit, then the next business cycle is about revenue growth and finding new markets as the means to fiscal health. And that means that the Internet becomes indispensable. The better you know how to leverage the Internet for your business the better off you will be as an individual -- for your current employer or the next.

Interestingly, the need to find efficient ways to increase the market for goods and services comes just as advertising -- a traditional way to grow revenues -- is in transition. Many businesses are re-evaluating how they advertise, spurred on by Google, viral marketing on the Web, and better use of community outreach and online communication with customers, partners, and prospects.

In observing IT vendors in how they reach markets in novel ways, I now see four major thrusts (and a further diminishing role for traditional advertising). The four major go-to-market avenues are:
  • Traditional inside efforts. This means creating a compelling web site, a great sales force (inside, outside, direct and channel), strong ecommerce applications, downloads and other online distribution means, and super customer support. This will not change.
  • Traditional outside efforts. This means advertising through new and old media, marketing promotions and events, email and direct marketing, and PR/AR/IR. This section may well see resources shifted to the two newer categories ...
  • Viral. This means creating content and conversation, blogs/podcasts/videocasts, or reacting to content and conversation, such that online awareness is understanding is generated about your goods, services, and image, via the social networking effects on the Web. This is and should continue to grow significantly, probably funded by the previous ad budgets.
  • Search. Through all of a business's efforts, they should focus on making their values and knowledge easily accessed via Web, and more discretely searched through the keywords and phrases that best bind it to their users and communities. This will be the more effective way to grow the top line revenues for many companies for some time. Again, look for traditional ad budgets to fuel this arena, too.
So if you are associated with a business they sees the landscape as the country's leading economists do, and you recognize you must grow both current and new markets -- to spur more revenue and business volume -- and that you must do it efficiently, do yourself a favor. Right now pretend that you are a customer or prospect of what you sell.

Now, go to Google or another major web search engine. Search on some terms that might come to your mind as you begin a research or informational journey on what your business supplies. Focus on the problem that your online prospect will have, and the solution you bring to them. Does a search on one lead to the other? Does a question about to fix what you fix actually point to how to evaluate and/or acquire that fix? Right now, online?

It should. What you should see there in the top search results on the left, or organic side, are the fruits of all your marketing efforts:
  • Your website, your product and service descriptions, pricing and how you beat the competition in value, the means to contact a sales rep, a click-through to purchase option, or more direct help.
  • The freely available trustworthy informational assets on the problem-solution set that defines your business value, including conversations, media write-ups, third-party endorsements, interviews, and blogs ... anything that your communities generate about you.
This is how new revenues and market opportunities will be born most productively. When the going gets tough, a business's online marketing gets going.

Like many, you will also buy search-based advertising, based on those essential keywords, that create more ways for those seeking you out as a business to reach your website, product information, sales and support, and solutions. But when you want the most bang for the fewer bucks, the organic results pay best and longest. Invest in them now.

What's also interesting is that the investment, and -- more importantly -- the return on the investment you and your clients make in organic search results will remain strong in nearly any macro business environment. That's right, whether the business cycle is in profit growth mode, revenue growth mode, recession, depression, boom times or flat -- your best ticket to keeping the accountants happy is bringing in leads and sales organically, via search-inspired research and inquiry.

So my prognosis is that the ways in which the Internet can assist companies have evolved well during the past 10 years, but the coming business climate -- no matter what climate it is -- is where Internet marketing will be needed the most. And the future, no matter what the world economy is up to, will also deliver the most value and power through the reach of the World Wide Web.