Some new year's resolutions.

• Author: Hall, Robert
• Position: Marketing Solutions - Brief Article

This year, it looks like the personal belt-tightening that most of us adopt right after the holiday season will extend to the workplace. Corporate spending is bound to be reined in as the economy rides out the cluster effect of the downturn in the business cycle, terrorism and past overspending on information and technology.

That makes this new year a critical juncture for most companies. Where they decide to cut back will either tee them up well for the recovery or will exacerbate unhealthy tendencies.

We believe many companies are primed to change where they invest and where they cut back. Just as individuals annually swear off desserts or drinks or other indulgences that bring no value, so also are companies taking off the lampshade and vowing never to overindulge again.

We see evidence that companies are beginning to understand their customer income streams well enough to know precisely which tactics increase their value--and which do not. We see at least four areas where recent developments have made difficult budget decisions easier.

Proportionately less spending on traditional advertising. Good advertising still matters--it probably matters more than ever. But because it is by nature a less granular means of targeting the right customer incomes with the right tailored value proposition, it is proportionately less reliable in terms of specific impact. Advertising is no longer the blunt instrument it once was, but it is far from the laser beam today's message-saturated consumers can respond to.

Proportionately less spending on direct mail. Even without the anthrax scare, direct mail has been coming up against more critical scrutiny for two good reasons: metrics and volume. Its primary metrics are still response rates, conversion rates, products sold and so on. But these metrics are not expressed in terms of specific customer segments and segment profit goals.

Besides, customers are saturated. The sheer volume of mail diminishes consumers' appetite for winnowing through it.

Proportionately less spending...