All this hullabaloo about U.S. bailout recipients continuing to honor their sports marketing sponsorship contracts, got me thinking about the common misperception of marketing in our world. Albeit a pretty balanced post about the issue here at Huffington Post, I can’t help but add to the discussion.
People are steamed because of lavish parties, perks and executive pay run amock at companies receiving bailout (read: taxpyaer) funds. And I get that, I really do. I am not saying irresponsible spending should go unchecked or unregulated. But this “villagers charging with torches and dogs” has gotten out of hand. Let’s talk about the basics of marketing spending and revenue generated.
1) Closing Deals
While all these fancy sports sponsorships, golf rounds, and executive excursions can be seen as wasteful, it’s really just relationship marketing. Look past the glitz and glamour for a second and remember that. Financial services deals and the like are much more “relationship” sales than anything else – they are not selling chewing gum that people will just buy on impulse. If the American people really want to get these loans repaid, they have to let companies spend money on smart marketing so they can attract new clients and generate more revenue. And we should let experienced marketers be the judge of the best marketing to benefit their own companies.
Why and when did marketing get this reputation for equaling wasteful spending? I have fought this for years at many companies, where they fail to understand that marketing and branding – even if there is not a direct one to one correlation with a sale – is important for staying top of mind in customer’s eyes, maintaining customer loyalty and solidifying the brand perception. You have to look at the aggregate effect in many cases. No company I know of has ever increased sales while decreasing their marketing budgets (not long term anyway) Yes, you might be jealous and feel outraged, but this is the way business is generated in many sectors – if it wasn’t a successful tactic, companies wouldn’t be spending money to do it. You would be surprised at how many deals get closed due to such relationship marketing. While it can be fun and guests are indeed pampered, it’s about the bottom line. And any of us who’ve had to give up family and personal time to travel and entertain clients knows it’s not all fun and games – it’s still work.
I learned this over many years of doing “hospitality events” for software clients. At first, I too thought this was just a boondoggle for salespeople and I reluctantly booked baseball and football suites with my budget. But I soon saw first-hand the value that comes from customers getting to know salespeople on a casual level, from relationship building outside the office, and from giving a little to get a lot. Many a deal was closed due to this kind of personal, one on one attention. It was worth far more in sales at the end of the day than what we spent on the events.
2)Keeping other infustries afloat
This kind of marketing spend has a domino effect – our money was keeping hundreds of hotel, taxi, waitstaff and ballpark employees employed and productive. Demanding all these trips and events get cancelled only ensures minimum wage workers will suffer in the end as well – have you seen what the pull out of conferences in Las Vegas and Florida have done to the hotel and hospitality industry?
3) Honoring contracts
It is not as easy as people think to just “pull out” of these big ticket committments. Putting aside issue#2 above, there is indeed a legal component to all of this. Last time I checked, we hadn’t changed the law to void all contracts just because people don’t like them anymore. Often, the company ends up having to pay a hefty price anyway to break such a contract – and then they are not able to reap the benefits of closing more deals and getting more exposure. So which is really a more wasteful use of money in the end – spending for nothing, or spending for something?
If we want companies to be healthy again, they have to close deals. To close deals of this sort, you need personal relationships and trust that are not built up across a conference room table. People may say they buy based only on quality of product or service but time and time again, this has been proven wrong. Relationships matter. Trust matters. Yes, people have gotten layed off at these companies and you might think those funds could be put to better use saving jobs. I feel for those layed off, I really, really do. But there will be no jobs left to save at the end FOR ANYONE if new business is not generated and the company keeps floundering. What’s the greater good? Let’s all have a better understanding of the function of marketing and branding in the sales cycle. Let’s let these companies market in the way that will bring in the most business – and pay back the taxpayer coffers as quickly as possible. Oversight is fine to ensure responsible spending….blind anger is just counterproductive.
What do you think?
