Since my livelihood depends on advertising budgets, it’s always disheartening when a client or perspective client makes the statement that during these unstable economic times, they are cutting back on or eliminating their advertising budget. How can they justify such expenditures when they are just trying to stay afloat?
Unfortunately, those decisions affect me and likewise, everyone else in the advertising arena, but more importantly, it adversely affects the company well after the economic crisis has passed. I’m not sure when we will regain some new sort of normalcy and how it will look, but when we do, as we always have, it will be apparent who has promoted their businesses and who hasn’t.
There have been countless studies of advertising during a recession or uncertain economic times. An excellent article by James Surowiecki appeared in the April 20, 2009 issue of The New Yorker. Mr. Surowiecki retells a story of two companies in the late nineteen-twenties and how advertising set the stage for dominance that is still held today. Look it up online, it’s a good read and he’s a better writer that I am. www.newyorker.com/talk/financial/2009/04/20/090420ta_talk_surowiecki
McGraw-Hill Research study of over 600 Businesses found that:
1981-1982 – business that maintained or increased their ad spend during this time
• Averaged higher sales growth during the recession and in the following 3 years!
By 1985 – sales of the businesses that maintained or increased their ad spend during that recession
• Sales had risen 256% over those that had cut back on advertising
Likewise in 2001 – another study found that aggressive recession advertisers
• Increased market share 2 1/2 times the average for all businesses in the post-recession
In 2002 – the Strategic Planning Institute illustrated that during economic expansion
• Although 80% of businesses increased their advertising spend there was NO improvement in market share
• Why? – Because everyone has increased ad spending! During a recession there is a scarcity of advertising relative to the abundance during an economic boom. Fewer advertisers mean that the ones who keep doing business will stand out to consumers. Consumers continue to consume, although at a lower rate; they continue to respond to advertising, although at a lower rate. The company that keeps their message out in front of the consumer, even at the cost of reduced short-term profits, is going to do more business than the company that doesn’t.
For an example close to home, J.S. Collard Design is on retainer with a national company that is very industry specific. This year, their revenues were flat. Not something that would be normally trumpeted to it’s employees, but in an industry that has seen a 30% revenue drop across the board, that’s pretty darn great. This can be attributed to adjusting with the current economic profile, complete SEO for their on-line catalog, launching two new websites and a mini site to promote their products and services, developing and adding new products and beginning a relevant e-newsletter campaign. This company reminds it’s customers that it is viable and can still provide a quality product. This company was prudently aggressive in it’s marketing and advertising efforts and it has paid off in the short term and will continue to do so when the economy and the public finds a new confidence.
We’re looking forward to a new year, a new decade, and a new economy.