Moving Forward

Kochan & Company

Spend More, Make More

Sep 16th, 2010 • Category: Advertising Articles, Consumer Insight

It’s an old adage, “You have to spend money to make money.”

At the start of the current Recession, while marketing and advertising budgets were being cut, many marketing consultants, including us, \”Are You in Danger of Being Forgotten?\” cited studies from past downturns that illustrated when marketing budgets are reduced during a recession it resulted in lost sales, lost market share and longer recuperation time than those who maintained levels of spending.

Recently Ad Age reported new results from the current downturn by tracking the spending and sales increases of the 100 Leading National Advertisers. While the overall trend was a 10% decline in spending, 26 firms in the Top 100 spent more and 70% saw a U.S. sales increase. As Ad Age wrote: “While there is no easy way to prove cause and effect, the sales gains at spending boosters should help reinforce the idea that advertising delivers.”

Highlights from this report include:

  • Walmart increased their budget in 2009 14% and managed a 1.1% sales increase, gaining share as the U.S. retail sales fell 2.1%.
  • The other 25 who increased their budgets and saw sales increases in 2009 included General Mills, Hershey, Nestle, Unilever, Subway, Progressive Insurance, IBM, Microsoft and Wells Fargo.
  • Marketers took advantage of media deflation to buy more share-of-voice.
  • The Top 100 increased their Internet ad spending by 34% and cable buys by 4% and freestanding inserts by 1%.
  • Possibly fueled by sales downturns in 2009, U.S. measured-media spending rose 5% for all advertisers and 11% for the Top 100 in first quarter of 2010.

Smart marketers of all sizes can apply the strategies that the Top 26 employed to increase sales and gain market share.

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Leslie is the Client Services Director of St. Louis-based Kochan & Company. Her responsibilities include strategic development of new business opportunities, research initiatives, account management, and [...]

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