Tuesday, December 16, 2008

To advertise or not to advertise during a recession?

The article below shares an important, yet counterintuitive point about marketing during a recession: it's actually best to increase advertising efforts!

Advertising in an economic down cycle

In an economic down cycle, is it best to batten down the hatches, hunker down and ride it out? No!

Businesses have been asking this question for decades and every major study reaches the same conclusion: continuing with a marketing budget equal or greater than pre-recession levels produces the best results.

Advertising executive Roland S. Vaile tracked 200 companies through the recession of 1923. He found the biggest sales increases were rung up by those who advertised the most. During the post-World War II recessions of 1949, 1954, 1958 and 1961, the companies that cut back on advertising saw the biggest declines in sales and profits. In 1974, the companies who cut advertising budgets lagged far behind the ones that maintained or increased advertising.

The research firm, McGraw Hill analyzed 600 companies from 1980 through 1985. Results showed firms that maintained or increased advertising expenditures during the 1981 recession averaged significantly higher sales growth, both during the recession and over the next three years as compared to those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers rose 256% over those that cut advertising.

The conclusion is unanimous: advertising aggressively during recessions not only increases sales but also increases profits.

For maximum results both now and in the future, consider these timely tips:

  • Don't cut your advertising budget, increase it! Let your competition cut theirs. Once they abandon their marketing and promotion, your message becomes far stronger and more effective.
  • Don't waste money advertising in the wrong places to the wrong audiences. Develop a strategic marketing plan that tracks your best customers and in turn targets them in your ad placements and messages. You can’t be all things to all people, but you can waste a lot of money trying.
  • Stay in close touch with your most loyal customers. Now’s a good time to develop a customer appreciation program.
  • Maintain continuity. Advertising works cumulatively, so remind people frequently about your brand and don’t deviate from your core message.