Maybe you already know the value of advertising in tough times—you just need to convince the budget manager in your accounting department. Or maybe you haven’t heard the theory that advertising in a down economy is even more important than advertising during good times. If that’s so, I’ve got some facts that may help you get past this dangerous roadblock in your company’s path to success.
I’ll back up my information with some stats further along in this commentary, but let’s start by asking a few questions: If you cut your advertising, will customers think of you first when they are finally ready to make a purchase? Or will the first company that comes to mind be the one that kept advertising when you stopped, despite the economy?
Consider these figures: In a survey by for American Business Media by Yankelovich Partners/Harris Interactive Inc. of 505 executives at U.S. companies (with at least $5 million in annual sales):
- 86 percent said when they see advertising by a company in a down economy, it keeps that company top-of-mind when they make purchasing decisions and makes them feel more positive about that company’s commitment to its products and services.
- 99 percent said that, in a down economy, it is important to keep abreast of new products and services for their industries.
- 46 percent rank trade magazines and professional journals as their No.1 source of information,
Where did these top purchasers find the information about the products and services they needed (or expected to need)? Business-to-business publications.
- 2 hours, 15 minutes: Average amount of time surveyed execs spent reading b-to-b magazines every week.
- 4.6. Number of b-to-b titles surveyed execs read in month prior to survey.
As the survey implies, many customers may assume that your firm is either no longer in business or is on shaky ground if they don’t see any marketing from you. Therefore, maintaining your advertising suggests, in a subtle way, that your business has been able to skillfully maneuver through the recent downtime. And, it means your company is one the customer can trust will stick around, no matter what happens with the economic outlook. If that doesn’t convince you, look at it this way: If customers see your brand during times like these, they will remember the strength of your brand when they are ready to make a purchase.
Another thought to keep in mind is that you probably cut advertising because it’s one of the areas of your budget you think of as flexible. But Jan Slater, who studies brand strategy as a professor and head of the Department of Advertising at the University of Illinois at Urbana-Champaign, told Promotional Products Business magazine that the opposite is true. In regards to businesses, she says, “What they should be doing in a difficult economic time is retain their level of spending, and maybe even up it. Because in a tough economic situation, they have to work twice as hard to get the sales they normally would.”
She also pointed out to PPB that marketers commonly use a set percentage of ad sales as a metric for determining their companies’ ad budgets. This method actually works in an inverse, negative way, Slater says. “If their sales go down, then their advertising dollars go down at a time when their advertising dollars should go up,” she says.
A variety of studies exist that have support these theories. Much of this research studied the marketing efforts of big-name companies you’ll recognize—companies that maintained or increased ad spending during recessions and ended up surpassing their competitors once the economy improved. One of the most-well known examples is how the Kellogg’s cereal company launched itself past Post by advertising during the Great Depression when Post put its marketing on pause. More recently, during the 1981-1982 recession, Wal-Mart kept advertising when Sears stopped, propelling Wal-Mart to the retail giant it is today.
Similarly, Gillette left Palmolive in the dust by advertising and staying upfront in consumers’ minds during that hard recessionary time.
Even more definitive info is showcased in some McGraw-Hill Research conducted after the 1981-1982 recession ended. The firm analyzed the performance of 600 companies between 1980 and 1985. It found that the businesses that maintained or increased ad expenditures during the recession had significantly higher sales post-economic slump. In fact, companies with aggressive advertising had 256-percent higher sales than companies that didn’t advertise.
Why do these companies see such exhilarating results from their advertising? Because people never stop evaluating, judging and accepting or rejecting brands, no matter what the state of the economy is. People experience a psychological process of buying into brands. And that process is ongoing whether they are actually making purchases or not.
There’s also the cumulative effect of advertising to keep in mind. The more familiar customers are with your brand, the more likely they are to purchase your brand when they finally have the money to do so.
It all boils down to this—advice you may have heard before, but it’s worth repeating: When times are good, you should advertise; when times are bad, you must advertise.