No time to bail out on marketing

The rules of business are simple.

First rule: Provide a great product or service.

Second rule: Tell people about it.

Third rule: Provide great customer service.

Recessions, however, make even smart business people nervous about the second and third rules because marketing and customer service cost money, which can be scarce in economic downturns like the one the U.S. and the Wood River Valley are experiencing.

The downturn is making the cities of Sun Valley and Ketchum so nervous that Sun Valley just cut its economic development and information services budget by 38,000, or 13%, despite the fact that the city projects a 3% increase in local-option sales tax revenue.

Last year, the city of Sun Valley spent $338,000 on marketing and visitor services contracts with the Sun Valley Ketchum Chamber of Commerce. The cut likely will mean a reduction in marketing or services at the Visitors Bureau.

Ketchum is considering similar cuts.

While that may be music to the ears of people who would like to roll back the valley's economy to the days when dogs could sleep in the middle of Main Street, it's a serious matter for businesses. Cuts might produce ripples that could affect other companies that are critical to the valley's success—companies like airlines.

The move to cut marketing flies in the face of well-established research. A landmark study by McGraw Hill Research that looked at advertising investments during the 1981-82 recession found that in the six-year period following the end of the recession, companies that did not reduce spending on advertising during the recession increased sales by between 16 percent and 80 percent. The increases remained for years after.

Investment in marketing is as important as any product or service. Customers cannot buy if they don't know a product exists or can't distinguish it from others.

Getting noticed in the noise is always a struggle for Sun Valley and Ketchum. New research by the chamber's marketing consultant shows that just 28% of a national sample of people with incomes over $100,000 were aware of Sun Valley, with 55% awareness by those living in the Northwest.

That's chilling.

Reduced marketing is likely to compound the problem and to create a negative feedback loop. Fewer visitors will produce fewer local sales taxes that could require more cuts, not only in marketing, but in city services as well.

This is clearly not the time to reduce a marketing budget that is already pitiful compared to Sun Valley's competitors'.