If your CEO hasn’t yet told you that your budget is cut…they will. Regardless of whether it’s because they’re being cautious, or they’re seeing a drop in orders, it will happen. So as a marketing executive, what should you do?

The bravest souls, the strongest CMOs, the most strategic marketing leaders, will argue against making cuts (see Recession Marketing: What the Best Companies Do).

However, most of you, for one reason or another, will need to deal with the cut. So, let’s assume that’s the situation you’re facing. And so, here are some ways to proceed:

1. Freeze hiring: Hiring is a big commitment. If you hire now and you have to reduce headcount later, you’ll seriously regret the hire you just made

2. Let your questionable performers go now: If you were thinking they might need to go, they probably should

3. Monitor and understand your competitors’ moves: see Responding Competitively during a Recession

4. Consider contractors: Contractors give you the ultimate flexibility. You can use them part-time. You can use them on a project and let them go once they’re done. You can always let them go at any time for any reason, and the termination process doesn’t cost you anything

5. Cut back on your areas of biggest spending: (after headcount) For you, it could be advertising, tradeshows, reseller programs or something else. The simple point is that your greatest dollars exist in certain categories. You can make relatively small percentage changes in those categories without changing your overall strategy, or your overall marketing mix

6. Automate some of your marketing activities: The options available can be overwhelming, but there are many excellent solutions out there. (More on marketing automation to come at a later date)

7. Ask your team the hard questions about what’s giving you value: It’s absolutely the case that a lot of marketing is very difficult to measure. That will always be the case. But just because it’s hard to do doesn’t mean you shouldn’t make decisions based on the information you can gather

8. Get smarter about your markets: Let’s face it. Very few of you know what you should know about the markets you serve and the markets you are attempting to serve (the new markets). There are lots of ways to make this happen, and I’ll bet you’ve under-invested in this area

This list could go on forever…What do you think is the best way to proceed in this climate?

Although it has seemingly crept up on us, the “phone” has become a portable “Instant Messenger” device for a large number of users. According to a recent Nielsen survey reported in FierceWireless:

As of Q2 2008, a typical U.S. mobile subscriber sends or receives 357 text messages per month, compared to placing or receiving 204 phone calls. Though the number of calls has remained relatively steady, the number of text messages is up 450% from just two years prior.

That trend is even more pronounced among teenagers, who send/receive an average of 1,742 text messages a month.

What does this mean to us? It has significant implications for anyone related to this industry, such as:

• Implications for form factor and user interface for mobile devices, if the “talking” element is secondary

• Safety concerns about texting in the car, beyond worrying about using hands-free
• Advertising opportunities in exchange for subsidizing the text messages; there are more opportunities to advertise (and in context sensitive way) with text than with voice
• More services that use SMS to transact. I still wonder why the receptionist at my dentist tries to phone me while I am in a meeting just to confirm an appointment, while in other countries it is common that they do the confirmation by text message.

Are we stuck in a “talk” rut?

In a McKinsey article (subscription required), they talk about pricing in a downturn. I’ve summarized some of their thinking and modified it for the marketing audience.

(I really like McKinsey. We often follow them within our clients after they’ve completed their work – not because they didn’t do good work, but rather because there is so much work to do after they leave.)

Pricing is always a challenge, and more so in a downturn. Demand decreases, price sensitivity increases, competitive pricing often declines and the cost of sales increases, ultimately lowering margins. So, rather than just lower your prices, what can you do?

1) Watch for shifts in price structure: It can be easy to watch the sales organization create unique deals to make sales happen, which have an impact on changing the way pricing is done. Sometimes this is acceptable. But it should be done in the context of understanding the long-term impact, not just on a per-deal basis. For example, it’s possible that a change in price structure for one deal will open up opportunities in other accounts as well, if approached from a corporate-wide perspective.
2) Monitor customer-level profitability: As prices decline, you may find that some customers become unprofitable. Others become less profitable and should be approached differently than those with higher profitability.
3) Adjust to changing customer needs: Through market research and direct contact, you can determine how economics are changing for customers. The question to ask is – how can we restructure our pricing to address the changes our customers are facing?
4) Update price sensitivity research – often: Your customers are facing cost-management challenges. Your competitors are making pricing changes. The research you completed a short while ago may already be out of date.

However, a key point missing from the McKinsey work is related to understanding the needs of non-customers and how that can impact your pricing strategy in a downturn. To learn more about this critical step, see What’s Your Market IQ?

What do you see as important steps to take in pricing in this economic climate?

There was an interesting story recently in Business Week on heads of companies and their take on Twitter. Given the amount of information overload and the pressure on CEO’s to be efficient with time, use of Twitter makes a lot of sense given its 140 character limit and ability to give/ get instant feedback.

My favorite CEO to follow on Twitter is hands-down Tony Hsieh, CEO of Zappos.com if you haven’t seen his Beginners Quick Start Guide and Tutorial to Using Twitter its worth a read.

CEO’s Benefits for using Twitter:

• Feed reader: I monitor Twitter several times/ day to see whats happening. I know many people who no longer read news sites and gain most of their daily information from Twitter alone!

• Brand Building: abilty to communicate your company culture, brand and personality. Ability to raise visibility of the CEO and your brand.
• Focus Group: quickly reach people with news or questions - get instant feedback - 24 hrs/ day open feedback without filters. I frequently put questions out to my Twitter network and am always amazed at the generous response I get on everything from requests for stats to opinions on issues.
• Networking Tool: connect directly with others in a effective way. I have personally connected with journalists and executives on Twitter that way that would have been difficult to do otherwise. I frequently see CEO’s Twittering about where they are and inviting people to join them for coffee or discussion.
• Monitoring: spot trending or buzz around a topic or technology - FAST! If I want to know where the buzz is on a specific topic, I usually turn to Twitter first. Many social analytics tools now include Twitter in their monitoring of conversations.
• Drive traffic: to your website - Twitter community is ACTIVE! Post a popular post on Twitter with a link to your website and you will see a huge spike in traffic and usually an increase in your network of followers.
• Humanizing your communications: there are some who don’t like mixing the personal chatter with business on Twitter - while others believe that some element of this contributes to us seeing the human side of a business or CEO.

Over the past year I have been following the number of large enterprises and media companies that are using Twitter in their communications, as well as advising several of Crimson’s clients in their use of Twitter as an effective social media marketing tool. I find the most compelling posts from CEO’s to be those that expose their everyday activities as people. I hope to see more CEO’s embracing Twitter and I personally welcome more of this “human element.”

A recent Global Survey by McKinsey, How Companies Respond to Competitors (subscription required) has some interesting observations. In the following, I highlight some of the key findings and provide commentary on how this relates to technology companies operating in a downturn.

The study looked at two key competitive moves — lowering of prices and innovation. Both if these are highly relevant to technology companies. (See Compete Better, Use Your Competitors’ Products)

Key finding: Most executives gather information from news reports, industry groups, annual reports, market share data, and pricing data. Very few obtain information from reverse engineering and mystery shopping. This is not because they don’t understand the impact of the competitive threat – they do. It’s my contention that they simply don’t focus sufficient energy and resources on understanding their competition to address potential competitive threats.

Key finding: Executives don’t spend time on an exhaustive analysis of the options for responding to a competitor’s move. And, their response tends to be slow. Why is this? I believe it’s because they have not been methodical in tracking their competitors to date, and being comprehensive regarding a response isn’t really possible if they haven’t been closely tracking their competitors to date. The result – I believe - is that their competitive responses are amateurish and done intuitively rather than based on sound analysis. Not a good thing.

Finally, a word on competitive response in a recession. When customers lower their spending, it rarely means that they’re no longer spending, it just means they’re spending less. The pie is smaller. To me, that means that competitive analysis, and competitive response is extremely critical in a recession. To maintain market share, and/or margins and/or revenue, a company needs to take something away from the competition.

This study shows that companies aren’t very good at the competitive game, especially in a recession (See Recession Marketing: What the Best Companies Do). To that end, not competing is a serious mistake.

As I watch the impending mobile internet revolution and the mobile advertising that will follow it, I am constantly wondering whether linear thinking is holding us back. In the article in eMarketer titled The Big Picture on Small Screen Advertising, John du Pre Gaunt says “Historically, the gap between hope and reality for mobile video/television has been attributed to immature technology, Video content on mobile phones looked broken or washed out. Soundtracks often did not align with the moving images…”

In light of Apple “selling” 60 million apps for iPhones in the first 30 days, it looks to me that the gap is in imagination of the advertisers rather than a gap in either demand or technology. Is this a case of advertisers wanting to simply repurpose their TV ads on a small screen? If so, that would be tantamount to their having added talking-head images to radio ads when TV was a new technology — oh wait, that is what advertisers did for much of the first 10 years.

My view is that advertising needs to change to take advantage of this new medium. The numbers are big enough to justify creating new forms of advertising. Perhaps sponsor a free app, and do some mobile “product placement”. Perhaps leverage the power of social media as it goes more mobile (Facebook has a nice app for the iPhone, for example). Advertisers are losing time and opportunities if they wait for mobile phones to have the resolution, bandwidth, processing power, screen size, etc. of television.

We are experts in marketing. We work with the best technology marketers in the world. And, we’ve see two differing responses to marketing in a recession.

The first is the most familiar: marketing is discretionary and so, marketing gets cut. Marketing doesn’t immediately impact sales, therefore it gets cut. Investigating new market opportunities takes time, so that work gets cut. Developing new strategies don’t impact sales this quarter, so they don’t get done. Companies might keep their investment in lead gen, but that’s about it.

The second is the best practice for companies that are not afraid of their immediate future and are are willing to invest beyond a “quarterly” mentality. Start-ups don’t do this nor do second-tier players. Companies that have a long-term investment philosophy do this… they INCREASE their marketing investments in a recession.

And, why is that?

1) Competitors are cutting back. Every dollar spent now is a dollar that has a greater impact than during robust times when you have to spend just to keep up. There is less noise in the markets, so your message stands out now.

2) Marketing takes time. Hello. If you believe that marketing is about this quarter, then no wonder you cut back. Marketing is about creating a long-term sustainable advantage. Sure, marketing has a role in lead generation, but that is a relatively minor role. If you ensure that marketing is making investments in the future, then you will enjoy a robust future.

3) New opportunities will present themselves, but only if you are investing money in looking for them. If you cut back, then you’re just doing more of the same. If you continue to invest, you will see things that didn’t exist before. Many companies change their strategy in down times because they are have continued to investigate new market opportunities.

4) Your channel partners need your help. In a time when everyone is cutting back, your partners are suffering. However, if you step in to work with them when they need it the most, if you train them on your products and help them market your products more effectively - not only will you take market share, but you create loyalty.

5) Since your customers are cutting back their buying, you often have to change your messaging to reflect this. You need to understand how the decision-making process is changing. Doing this right requires some work to develop the right messages to the right buyers.

6) Finally, what kind of marketing organization are you? I have spoken about what role the CMO should play in CMOs as True Leaders. Are you the tail of the dog, or is your marketing organization driving the strategic direction of the company? If you cut back, then you are the tail.

BEWARE: The tail can get cut off.

I have been Tweeting on Twitter for awhile and I really enjoyed a recent session on Microblogging and Twitter: who’s using Twitter and for what purpose? What is the business value of use cases?

Some current uses of Twitter from the group:

• Drive Traffic to other web content - such as blogs, announcements, articles, etc. Promotion - PR - push out/ broadcast announcements, events, etc.

• News, breaking news, awareness
• Social Filtering - getting your news via Twitter now - some rely on Twitter now to get general news.
• Communication efficiency - the nature of the brief and frequent posts, its efficient and effective
• Brand Cachet - for those who are currently on Twitter
• Work streaming - updates, status,
• Reports from the field, live messaging
• Member support
• Conversation monitoring/ brand tracking

Twitter etiquette - “Twitiquette”
Things to think about…

• Tweet Formats: A lot of discussion about “is it acceptable to have multiple persona’s on Twitter?” General consensus was yes, similar to having multiple emails.

• Do you Twitter professionally vs. personally? Public persona’s - some people are experimenting with multiple identities in Twitter (personal vs. private). There are examples at companies like Zappos where there are many employees with Zappos in the Twitter name alias.
• What happens when a “fan” takes over your brand name on Twitter?
• When do you use Twitter to broadcast only vs. get into dialog?

In one of my recent speeches, I applied Malcolm Gladwell’s Tipping Point principles to conclude that we are at or approaching this point for the mobile internet, and are on the verge of explosive growth. He extracted his principles from looking at the conditions driving the spread of viruses, and applied them to new businesses and other social phenomena.

The three principles are:

1. Law of the Few: There is power in the individual on a stand-alone basis, rather than relying on a large group
2. Stickiness Factor: Once “infected”, the “virus” would stay locked in. Many web 2.0 services spend a great deal of energy creating stickiness in their strategies
3. Power of Context: Other external factors that will enhance or defeat the”virus”

Thanks to Esme Vos, I saw this thoughtful post-mortem on the demise of Meetro.com, and realized it was an interesting test of the tipping point principles. This was a site that displayed locations and profiles of “friends” on their mobile devices.

Of Malcolm Gladwell’s three principles to drive viral growth, I suspect Meetro scored very well on #2 and was about to score well on #3, but fell down on #1.

It was difficult to develop #1. Law of the Few because no individual could benefit from the service himself; it required large numbers of members to be effective. I suspect by the profile that Meetro did well with #2. Stickiness Factor, by providing a broad range of functions and services to members, once connected. And unfortunately Meetro died before it could benefit from the explosive growth of Web-enabled mobile devices (such as the iPhone, which would have enhanced #3. Power of Context. As Paul Bragiel points out in his post, there might still be a brilliant future for this service, perhaps provided by a company that can already deliver a large network of users, thus delivering on principle #1.

I wonder how many VCs are doing Tipping Point strategic analyses of startups, in addition to creating stacks of discounted cash flow projections? It would seem to be worthwhile.

I loved Cyndy Aleo-Carreira’s blog post on why we don’t need a social network for every product! I do agree that we don’t need a social network for every product! I always like to view social media from the perspective of the user - and often when I don’t see the value, its usually because I can’t relate to the network, they charge for what I can get for free elsewhere, or the user experience is so poor that I don’t bother.

There are a few social networks that come to mind that I just don’t see the value in: Classmates.com (They charge for what Facebook provides for free) or PMSBuddy (I don’t feel the need to share this info with friends!) - though I am sure I am going to be flooded with emails on why these sites are incredibly useful. I have seen over time that there is a social network for everyone, but personally I don’t want to socialize around every product or topic. Instead what I would like to see is social media tools (comment, rate, send to a friend, RSS, embed URL) become an integrated feature of most web based content.

My favorite social networks include: Flickr, Twitter , Facebook, LinkedIN, Experts-Exchange, Etsy and Pleoworld. Full Disclosure that I am biased when it comes to Ugobe/ Pleoworld - Crimson advises Ugobe on the strategy amd management of the Pleoworld community!