Stick, twist or bust: Thoughts for digital marketing investment in 2012

After the recent news that Britain could be sliding back into recession , it might appear a strange time to argue for increased investment in digital marketing channels, such as search. Inevitably, battening down the hatches and hoping for the best will be the default strategy for many retailers.

However, burying your head in the sand is likely to see you lose market share in an increasingly complex online and multichannel environment, or worse, not survive what is expected to be another tough year for trading. For that reason, I argue that retailers should ignore much of the doom and gloom they are exposed to through the mainstream media and instead base investment decisions by taking other external factors into account, namely:

  • Basic economic theory, specifically the shape of the economic recovery
  • The continued growth in online sales
  • Sector specific trends

Let’s look at each of them in turn.

The shape of the economic recovery

I know what you’re thinking; ‘this is a digital marketing blog, why the lesson in economics?’ With that in mind, I’ll keep this as brief as I can. However, it is important to appreciate economic trends so you can time your investments and take maximum advantage of the upturn, which, despite recent news, will come. The uncertainty, even for the experts, is just how long it will take.

I’ve been fortunate enough in recent weeks to hear a couple of different perspectives from some rather knowledgeable people. On Tuesday 24th January, I attended a dinner for Mervyn King at the Grand Hotel, Brighton. Whilst it would be fair to say that Mr King didn’t give a huge amount away, he did state that he expects the road to recovery to be “long, arduous and uneven”. On the face of it, not particularly positive news.

I’ve also spent some time with Shirlaws, a highly respected group of business coaches. I’ve been studying their free ebookA guide for every business owner to thrive, not just survive through the biggest depression in 100 years’, which I recommend all business owners and senior decision makers to read.

Now I don’t pretend to be an expert in economics (grade D at ‘A’ Level if I remember correctly!) but what I have gleaned from my time with Shirlaws is greater context around where we are in terms of the economic cycle and therefore, in their view, where we are heading. So, if you will entertain my attempts at explaining economic theory for one moment, here goes…

In short, economists talk of three main types of economic recovery. The first is the common V-shaped. The economy goes steadily down over time and then steadily back up again.

The more dramatic but fortunately rare, L-shaped recovery involves a sharp plummet followed by a flat line. Not good.

The third, W-shaped, historically occurs every 30 – 40 years. If output should fall again between January and March, as many expect, the UK will officially be back in recession. As such, we will be well on the way to a W-shaped recovery or ‘double-dip’. In this instance, the economy climbs after the initial recession then flattens out for a period before dipping for a second time. Only after the second dip do we then see a full recovery, as demonstrated below:

Why does this brief lesson in economics matter to you? Because as Shirlaws make the point in their ebook, most business owners implement strategies in response to a change in the economy as opposed to taking a more proactive approach based on well documented economic cycles.  During recession, businesses tend to wait until there are clear signs of economic recovery before investing in new markets, products, marketing, staff and so on. Considering the return on such investments can take many months, perhaps years to fully materialise, businesses taking this approach fail to maximise sales at the point the economy actually turns. By the time they do so, it is too late to ‘catch the first wave’, as Shirlaws put it.

Of course, the skill is in timing investments to catch that first wave. For many business owners and managers that is where the uncertainty lies. But let’s take a guess that ‘the turn’ is 12-18 months away. If you are looking to take maximum advantage of the increase in real earnings (as inflations falls) and increased consumer confidence, you should be reassessing your investment in digital marketing opportunities now. Natural search (or SEO), for example, is one example of an online marketing investment that takes time to mature. With this in mind, waiting until the recovery actually arrives to invest in a natural search strategy will essentially mean you miss maximising sales during the early, buoyant stages increased consumer confidence and spending.

Those businesses that carefully consider and time their online marketing investments during the downturn by increasing resource in existing, profitable channels, whilst investing in emerging ones, will be best positioned to overtake more cautious competitors and therefore take full advantage of increasing demand as the economy turns for the better.

Growth in online and mobile sales

In 2008, UK online retail expenditure accounted for an 8% share of total retail expenditure. By the end of 2012, it is estimated to be over 14% (Verdict Retail).

And according to CBI figures, ecommerce was the only part of the UK retail market to report growth in the first two weeks of January 2012.

Whereas the specific figures may vary, industry bodies, research groups and trade organisations all report significant year-on-year increases in Internet sales. All expect these trends to continue upwards.

Simply put, the ease and convenience of the web, combined with technology (mobile for example) is fundamentally changing how we research and purchase goods and services. As such, your business model might already be outdated if it does not account for these seismic shifts in consumer behaviour. We have experienced this first hand with a number of our clients; store sales are down, online and mobile sales significantly up. They’ve invested at the right time and at the right level to account for changes in their customers’ buying behaviour.

Therefore, regardless of the economic situation, businesses need to be investing in online operations simply on the basis that this is where your consumers are and therefore expect you to be. ‘Fish where the fish are’ as they say.

So whilst the high street is faltering and the mainstream media focusing on the negativity surrounding a potential double-dip, online continues to flourish. Look beyond the doom and gloom to plan and execute online marketing initiatives that follow changing consumer habits. Consumers are still buying; they are just doing it in different ways.

Sector specific trends

If you operate in the luxury sector, for example, I’d strongly advise avoiding mainstream media altogether! According to the UK Luxury Benchmark Report, the British luxury goods market is expected to grow by 57% in the next five years.  In essence, the demand for high quality goods and services has completely defied the recession, in part driven by consumers choosing to trade up to purchase fewer but better quality items and also of course, demand from the Far East, particularly China.

These trends are prevalent on the high street. Consider the winners and losers over the Christmas period; John Lewis, Waitrose and Sainsbury’s reporting strong trading figures, Tesco and Argos the opposite.

In this instance, a recovering economy, combined with increasing demand for premium and luxury products, means retailers and brands catering to the affluent consumer are presented with a once in a lifetime opportunity to increase customer acquisition with carefully considered investments in their online retail and wider multichannel strategies. The common misconception is that customers remain unwilling to purchase high ticket items online. For some, this may be the case. However, the internet has a significant role to play in the sales journey, from research through to the opinions of friends and peers, even if it isn’t where the customer actually converts.

Therefore, research the trends associated with your sector. And remember downward trends should not necessarily mean reduced investment in marketing. If anything, you need to be working even harder and smarter to attract and retain a smaller pool of customers.


During challenging times, it is all too easy to get caught up in the negativity thrust upon us by mainstream media. What I hope I have demonstrated however is that news of a double dip might not be quite as grim as it appears on the surface. When you take other external factors into account, such as economic trends and changes in consumer behaviour, you will build a more robust business case for investment in your online retail marketing strategy.

One thing is clear; being available where your customers expect you to be, and presenting a consistent and seamless experience for those customers as they move between channels, will separate the winners from the losers in the next few years.

So what’s your next move? Stick, twist…or bust?

‘W shaped recovery’ image courtesy of Shirlaws

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