Ernie Canadeo on tightening the belts

by David Reich-Hale
Long Island Business News
Published: March 13, 2009

Ernie Canadeo has lived through good times and bad and here is his message: A bad economy does not give you an excuse to stop marketing. LIBN spoke to the EGC Group president about his company, the recession and where his industry is headed.

It's a pretty tough economy, so tell us, when is it going to turn around and what should companies do?

That's the question. I started of EGC in 1985 and we had some great years in the mid-1980s. Then the market died in the early 1990s. We were down again after 2001 and then it went up again. This downturn is a bit tougher than the last couple, and it may take longer to get out of it. Companies are being careful and they have to watch overhead. But they shouldn't pull back on marketing. Companies that continue to market during a downturn pick up market share when the economy turns around. We're also seeing a convergence of markets, where there's a combination of online marketing with traditional marketing.

What's the trend?

We've been working with our media partners and vendors, negotiating better prices. That's happening across the board.

And the media is willing to negotiate?

Everyone is willing to renegotiate. They have to.

So what happens when the economy turns around? I ask because I read a story recently in which shoppers at stores such as Banana Republic, who get 50 percent off or more on clothes, will never be willing to pay full price again. What's your take?

Life as we know it has changed. We've been a consumer-driven society for years. Everyone has lived beyond what their salary is. On Long Island, look at a family making $100,000 or $150,000. Look at how much they paid for their house, and dinner and a baseball game or hockey game. They've survived on credit. They run up credit and they drive a new car. We've all lived beyond our means.

And that's over?

Our parents didn't live beyond their means. I grew up middle class and we went out to dinner once a month and it was usually Chinese. I think we're reverting to that. Our kids want to walk into Abercrombie and spend $70 for a polo shirt. Those days are gone.

How will that change your business?

Over the next five to 10 years, companies are going to need to offer a lot of value. We have to offer a value proposition. At my agency, we give seminars that we pay for. I filled up a room at Fox Hollow recently and I'm going to get business for that. I'm looking out at the Sweet Hollow Diner and if I see a sandwich, a good sandwich, for $6.99, I'll probably buy that. It's good and it's affordable while, down the road, I might pay a lot more at Blackstone's or another high-priced restaurant.

So people are going to be more careful. But they still need to get out there and market themselves.

Yes. I always think there is opportunity. Aggressive companies can pick up market share, especially now that so many companies have retrenched. Also, a company that has some financial strength will have a much better chance at doing well than a company that is highly leveraged.