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Brands Watch Ad Dollars in Tough Times

Published May 1, 2009

BY NICOLE FORMOSA

LAGUNA HILLS, CA—Trimming travel budgets, cutting marketing and advertising dollars, prioritizing spending—it’s all become standard as the industry takes a more conservative approach to business this year in response to the nation’s economic fallout.

“You just have to watch it,” said Scott Turner, marketing manager for Santa Cruz Bicycles. “It’s kind of good, though. It makes you rethink everything again. For us we’ve just been expanding and expanding and expanding and every time we needed something we didn’t look and say, ‘Well do we really need that?’ We just said, ‘Well we’re going to need it. Do it now.’ We hired people all the time. For the very first time we had to stop and even cut back a little bit and we haven’t done that almost ever since we started.”

Santa Cruz, which slimmed down from 75 employees to 49 late last year, shrunk the travel budget this year and is scaling back on sponsoring small events, like its annual Hell Ride, which it has canceled for 2009.

The company still plans to attend larger industry events and hasn’t pulled back on sponsoring its Syndicate downhill team, Turner said.

As the belt tightens, costly print advertising is often one of the first line items to get squeezed out of the budget.

“Print marketing has been scaled back a little bit,” said SRAM’s Michael Zellmann. “We’ve just taken a conservative few months, but we’re still in major magazines. We’re still in Bicycle Retailer, we’re still in VeloNews and a number of other titles and we’re in and out of others. We have more responsibility with our relationship with our investors. We have greater responsibility to them and with that comes a bit more conservative approach to our travel, our spending, marketing and that’s just smart business.”

SRAM continues to support its popular sponsorship program—the company sponsors several hundred mountain bike and road teams each year—as well as its four-year-old, four-car neutral support crew, which logs 50,000 miles a year traveling to races.

Norco has pared back its expensive print ads and substituted social networking sites like Twitter and Facebook, as well as its own newsletter and Web site, said Pete Stace-Smith, PR and marketing manager for the company. Norco still advertises in magazines like Decline, Bike and Dirt Rag, but finds it difficult to reach customers in all its categories with such specialized publications.

“To do it right, you have to do what some of these other guys do and spend $200,000 on an ad campaign which we don’t have. We can’t do it right with one ad. If you can’t afford to play at a high level, what do you do? You kind of have to be creative and start looking into other ways,” Stace-Smith said.

Ritchey has also put the brakes on print ads in consumer magazines, but not necessarily because of the economy, said Rosy Casteñeda, marketing coordinator for Ritchey/Syncros. The company began looking at shifting its ad dollars to online mediums even before the economy dropped out, to keep up with the changing times, Casteñeda said.

“People go to the Web a lot more, it’s much easier to reach the larger amounts of people, but there are a few key print ads that we have kept,” she said.

In backing off print, Ritchey has stepped up its involvement with social networking sites like Plus 3 and devoted more resources to communicating directly with its customers.

For the first time, Ritchey recently sent an e-mail advertising its new parts upgrade kit to a list of about 3,000 consumers and got a 60 percent open rate.

“That was eye opening,” Casteñeda said, adding that Ritchey will continue using the direct-to-consumers approach this year.

Crankbrothers has become more active in the Southern California race scene in an effort to own its own backyard, and put more focus on its own Web site, online advertising and social networking sites.

“We’re trying to figure out how we reach people in a new way that’s cost effective. Events are a huge part of that, like grassroots events. Being more hands on at the bike shops, not just sitting back and letting distributors take the lead,” said Crankbrothers’ Christina Orlandella.

For some, the economic slowdown has actually been a reason to increase their consumer marketing budget. Pedro’s has implemented various cost-cutting measures recently, but it spent more money in the first quarter on consumer advertising and marketing than it did almost all of 2008, said Jason Elhardt, marketing communications manager for Pedro’s.

“In part, we want to show people we’re still here. In this economy, it’s important for people to think about cutting down on costs, cutting down on consumption and the bicycle seems to be part of that,” Elhardt said.

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