Think 2011 Was Rough? Just Wait for Next Year...

Well, what a year 2011 was. A new SecDef and Pentagon leadership, sequestration and budget cuts, the debt ceiling debate, bin Laden finally getting his comeuppance, U.S. forces withdrawing from Iraq, acquisition reform and all the merger/acquisition/spin-off activity that seems to have captivated the industry are all enough to make anyone’s head spin. I get tired just thinking about the past 12 months.

But even with all the turmoil that 2011 brought, it’s looking like next year will be even worse. The White House and Pentagon are still refusing to play nicely; likewise the services — who insist on creating joint programs they have no intention of actually sharing. As for Congress, they’re about as useful (and popular) as a bacon sandwich in a synagogue.

In short, we’re in for a little turbulence, so please ensure your seat belt is securely fastened around your waist and that your seat back and tray table are in their full upright and locked position.

Here’s what we do know: 


The 2013 defense budget will not be significantly smaller than 2012’s.
Even after all the bickering that’s surrounded the sequester cuts, very little of the actual pain will be felt until 2014 — if at all. The defense industry has powerful friends and a compelling argument against defense reductions, so it’s not a stretch to think that many of the austerity measures laid out in the Budget Control Act may never see the light of day. Evidence of this can already be seen in the working draft of DoD’s Future Years Defense Program (FYDP), a document that estimates military spending over the next five years and in no way reflects the sequester reductions.
 

Politics, rather than necessity will dominate defense spending.
On top of the sequestration cuts and political dysfunction (or PD as I like to call it), 2012 is also an election year. This means that the 2014 budget will be shaped by whichever party wins in November instead of what the Generals believe is needed in the field. And this won’t be the traditional GOP pro-defense, Democrats anti-defense style of election. It could well turn out that in the strange reality of 2012, Obama may be more sensible about defense spending that the Republican nominee, especially if the isolationist Ron Paul continues his strong showing.

However, one thing is certain: there is zero chance that the 2013 budget will make it to the President’s desk before October 1. So prepare for another Continuing Resolution — or three.



Defense companies will need to be innovative to get their message out.
Next year, “business as usual” just won’t do. To truly set themselves apart, quality companies will need to be innovative — in both their technology and the way they promote it. Expect social media to play a big role as companies and DoD realize the power of platforms such as Twitter, YouTube and Facebook. The Army is already leading this digital charge, developing Facebook-based networks for everything from PTSD to its football team.

This shift toward a more integrated style of marketing and engagement will further blur the line between PR/advertising and MarCom. Communications, whether at the corporate level or program specific, will need to be hyper-targeted and consistent in its theme.

For instance, whereas in the past it may have sufficed to bang out a few ads in support of Program X, future procurements will require a much more structured approach. This will invariably involve advertising and PR, but also much more. Think Hill engagement or coalitions; even grassroots advocacy and interest groups could become a powerful tool for intelligent companies.


So there it is, the world according to Elliott. Few years will be as challenging to our industry as 2012, but where challenges exist, so do opportunities. Let’s capitalize on them.

Happy holidays and here’s to a prosperous 2012.