Moving Forward

Market Turmoil.
Unemployment.
Recession.

There is no doubt that these current issues are changing your business. The first instinct is to protect profits, spend less and, yes, cut advertising and marketing as an expense when times get tough. It’s a strategy that we see in every downturn. It’s also a strategy that is much like being in a race and saving money by not buying fuel to get to the finish line.

The concept of cutting back on advertising to achieve the short-term result of bolstering a bottom line misses the long-term opportunity to take away market share from competitors who have adopted the “turn off the pump” strategy.

There is plenty of data from past downturns to show that advertisers who cut marketing budgets during a recession lose sales, lose market share and take longer to recuperate losses than those who maintain levels of spending. One study by McGraw-Hill Research analyzed 600 companies from 1980-1985. The results were conclusive. Firms that maintained or increased their advertising budgets during the 1981-1982 recession experienced significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of the companies that were actively advertising during the recession had increased more than 250% compared to those that stopped their advertising.

Another informative study, “Turning Adversity into Advantage: Does Proactive Marketing During a Recession Pay Off”, published in 2005, is based on data collected during the last recessionary period of the early 2000’s. The authors’ conclusion: there are always companies that survive these downturns by positioning themselves with the right marketing campaigns. This article also focuses on iconic advertising campaigns that were launched during challenging economic times, dating back to the Great Depression.

In tough times, increased spending pays off.  When advertising stops, the customer forgets.