Recessions and Advertising

By Lisa Mirabile

It Pays to Advertise - Recession as a Window of Opportunity:

Maintaining or increasing advertising during a recession leads to increased sales both during and after the recession in comparison with competitors who cut advertising. Maintaining or increasing advertising during a recession results in greater marketshare and share of voice, both during the recession (as competitors advertise less) as well as after the recession ends due to increased brand strength and consistency of exposure. Recessions tend to be brief (average 10 months), mild and are always cyclical. Importance of viewing advertising as an investment, not an expense.

Examples:

Roland S. Vaile tracked 200 companies through the recession of 1923, and in 1927 he published his findings in the Harvard Business Review, reporting that companies that advertised the most, fared the best both during and after the recession - they saw increased sales in comparison with companies that reduced their advertising. (Harvard Business Review, April 1927)

During the 1930s Kellogg continued their advertising and Post did not. This contributed to Kellogg's domination (over Post) throughout the 5 decades following the recession. (Electronic Media report, 4/16/2001)

During a recession in the mid-1970s Chevrolet abandoned their previous fixed-percentage ad budget and increased their advertising (showcasing their fuel efficient models). During the same period in order to combat the recession Ford cut their advertising budget by 14%. This resulted in Chevy increasing their marketshare by 2%. (Electronic Media report, 4/16/2001)

During the 1980-81 recession, companies that maintained or increased their advertising saw sales increase by 275% by 1985. Comparatively, companies that cut their advertising during the recession only increased their sales by 19% in the same 5 year period. (Associated Press report, 3/18/1992)

A MarketSense study of the recession of 1989-91 shows that Jif Peanut Butter and Kraft Salad Dressing increased their advertising and saw sales growth of 57% and 70%, respectively. (The Ed Clark Company, 11/15/2001)

Importance of Innovation and Shifting Brand Message during a recession:

Value and quality are more prized - people want to get more for their money.

Customer service and personal relationships become more valuable.

Brands that resonate with the consumer's current mentality are rewarded.

Examples:

a. In the recession of 1973-75 Quaker Oats shifted their message and presented grain products as a cheap form of essential protein. This resulted in reversing the long declining sales of oats, grits and cornmeal.

b. Ziploc shifted their message during a recession to emphasize their air-tight seal, which preserves leftovers efficiently, at a time when food prices are high.

c. Frequent Flyer programs - during a recession in the late1970s airlines began creating new ways to reward their loyal customers, giving them more value, or bang for their buck. As a result, American Airlines launched AAdvantage in 1981 as the first frequent flyer program in the United States. ( http://www.frequentflier.com/about.htm" www.frequentflier.com/about.htm)

During economic recessions Mercedes has "stepped away from the deal-of-the-month mentality to stress value above all else. When the market does get slower, we've found that position will carry us much further than the more traditional subsidy position of our competitors" explains Ken Enders, VP Marketing at Mercedes. (AdvertisingAge, 2/19/2001)

Small Ways to Maximize Impact and build brand strength in a recession:

Word of Mouth Marketing - cost efficient and extremely effective

Sponsorship - efficient way to reach target audience/limit extraneous efforts and cost

Excellence in Service

Viewing staff and team members as your number one unlimited resource

Step out of comfort zones - innovate and adapt.

Article by Lisa Mirabile CEO/President Vertigo

Lisa Mirabile CEO/President Vertigo