The Basic Argument for

Advertising in a Recession


When times turn bad, they’re made worse by hesitation, halfway measures, and panicky decisions. Such as the decision to reduce or eliminate advertising. The fact is, companies that maintain or increase their advertising spending during recessions get ahead. A less crowded field allows messages to be seen more clearly, and that increased visibility results in higher sales both during and after a recession.


Recessionary Advertising Works Studies by the American Business Press examined the relationship between advertising and sales in 143 companies during the severe 1974/75 downturn. They found that companies that did not cut advertising either year had the highest growth in sales and the net income during the two study years and the following two years. The studies also proved that companies that cut advertising during both years had the lowest sales and net-income increases during the two study years and the following two years.

And not surprisingly, companies that cut advertising during only one of the recession years had sales and net-income increases that fell in between.

recession

Long-Term Benefits A study by McGraw-Hill of both the 1974/75 and 1981/82 recessions confirmed the long-range advantage of keeping a strong advertising presence. It found that companies that cut advertising in 1981/82 increased sales by only 19% between 1980 and 1985, while companies that continued to advertise in 1981/82 enjoyed a 275% sales increase.

An industry-specific study published by the Harvard Business Review found that airlines that increased their advertising expenditure during 1974/75 increased sales and market share in both years, while airlines that cut advertising in both years lost sales and share both years.

The results of all three studies are consistent, clear and unequivocal: Those companies that advertise during a recession have better sales than those companies that don’t.

The way to minimize a downturn and take maximum advantage of the upturn is to maintain a strong communications link with your buying public.

Recession? Don't Run Scared During a recession, scared businesses tend to cut back on marketing expenses. This appears to be the smart bet. After all, most customers have become more cautious about spending. So why not conserve your resources, wait out the downturn and have funds to spend when the economy picks up?

In fact, smart businesses expand during a recession because they know there will be a shakeout caused by the scared businesses shrinking.

During any recession, there are always more than enough clients out there to keep you busy if you continue to market, and market smartly. Capitalize on your strengths. Make the most of your business relationships. Create or revive programs that enable customers to move ahead. Above all, stay upbeat, putting the dynamics of self-fulfilling prophecies in your favor.

If you behave like the scared businesses, or target them, you will contract. If you market to the smart businesses during a recession, you will continue to prosper.

It's up to you.

From www.wsj.com



two ticks and ppa logos