Common Cents
Advertising In Adversity
During a recession many businesses have a natural inclination to scale back on marketing activities in an effort to save money. However, there are numerous independent research studies that confirm businesses that implement and maintain marketing budgets during a recession, experienced “significantly higher sales growth”; a growth in sales that averaged 2.5 times higher than their competitors, not only during the recession years but also in the three years that follow a recession (McGraw-Hill).
These same studies have discovered that businesses that maintain and increase advertising during times of recession can actually improve their market share and get a higher return on investment at costs much lower than during good economic times. And in 1985, the sales of companies that were “aggressive recession advertisers “were 256 percent higher than those which “did not keep up their advertising.”
Dr. Gary Lilien, co-author of the study “Turning adversity into advantage: Does proactive marketing during a recession pay off?” goes on to state that “Companies that have been looking at marketing as an investment, and not an expense, and have been running their business through customer knowledge are the ones that are going to come out of this [recession] really, really well”.
Time after time it’s been proven that a recession is a time
to increase your marketing budget.
Just recently it was reported that two of the world’s biggest advertisers, Unilever and Procter & Gamble, would not cut their marketing budgets. Why?Because in an economic downturn, the shortsighted companies will reduce their advertising spending which in turn allows businesses that retain or increase their spending to steal the market share from those that don’t.
Also, during a recession advertising space and marketing services may reduce in price so that the same advertising spending buys you more media. There is one more encouraging fact we found that was established by a study from independent research firm, Meldrum & Fewsmith. The results are both reassuring and insightful: Aggressive advertising not only grows revenues; it even increases profits. Let’s face it… an increase in profits is something we can all appreciate.
This video is a great visual representation of the effects of advertising in times like these. This early-90’s British TV ad addresses advertising during the recession of that era.
“In every adversity there lies the seed of an equivalent advantage.”- Robert Collier
