When Australian companies see tough times the first thing most chief executives do is to take to the marketing budget with an axe.
As a result, all forms of media are among the biggest suffers in a downturn. It’s a temporary mechanism that really only buys time and can often cause great long-term harm.
That’s why this week, when glancing through some back profit reports, I was fascinated to see Webjet increase its marketing spend in the year ended June 30 by 23% and then announce that in the current half year they would lift marketing even further with a particular attack on the business market and regional Australia.
By correlating the new booking with its advertising its been able to see the extra marketing was a big factor in it increasing turnover 20% and profit by 14% at a time when travel was depressed.
Significantly, Webjet increased market share because its rivals did not embrace the same strategy.
Webjet says that the low advertising rates being offered by the major media groups led by free-to-air TV are so good that it represents a unique opportunity to lift market share.
Chief executives in Australia are now looking at growth options (An island of hope, August 31) but the first strategy they should consider is whether it’s time to restore the marketing budgets. Many are now feeling sufficiently confident to take that step.
I should of course declare an interest. I am a shareholder in Business Spectator which gains its revenue from advertising. Our income is rising so the Webjet example is infectious.
This article first appeared on Business Spectator.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
