The Importance of Advertising During a Recession
The dreaded “R” word.
So, is this a recession? It very well could be. And if it is, it will historically last for about a year. The U.S. has experienced nine recessions since World War II, which means we’ve lived in recessionary times one year out of every six. We should be used to recessions, but the mere mention of the word in any official capacity sends shivers up the spine of even the toughest businessperson.
History demonstrates that businesses that recognized the fact that growth does occur during recessions and took advantage of it, were able to make gains in their market share despite economic hard times. With media rates softening and competitors sitting tight and cutting their marketing budgets, an aggressive business can experience great strides in a recession.
Over the years hundreds of studies have been conducted to prove companies should maintain advertising during a recession. In the 1920’s advertising executive Roland S. Vaile tracked 200 companies through the recession of 1923. He reported in the April 1927 issue of the Harvard Business Review that the biggest sales increases throughout the period belonged to companies that advertised the most. After World War II, Buchen Advertising, Inc. decided to plot the sales of a large number of advertisers through successive recessions. In 1947, it began measuring the annual advertising expenditures of each company. When they correlated the figures with sales and profit trends before, during and after the subsequent recessions, they found that almost without exception sales and profits dropped off at companies that cut back on advertising. Their studies also revealed that after the recessions ended, those companies continued to lag behind the ones that had maintained their advertising budgets. These studies consistently have proven that companies that have the intelligence and guts to maintain or increase their overall marketing and advertising efforts in times of business downturns will get the edge on their timid competitors.
A MarketSense study during the 1989-91 recessionary period shows brands such as Jif Peanut Butter and Kraft Salad Dressing increased their advertising and experienced sales growth of 57% and 70% respectively. During that time, most of the beer industry cut budgets, but Coors Light and Bud Light increased theirs and saw sales jump 15% and 16% respectively. Among fast food chains, Pizza Hut sales rose 61% and Taco Bell’s 40% thanks to strong advertising support, reducing McDonald’s sales by some 28% MarketSense concluded the study by reporting. “The best strategy for coping with a recession is balanced exploitation of ad spending for long-term consumer motivation, plus promotion for short term sales boosts.”
What is the bottom line during a recession? Be smart. Don’t cut your advertising budget, increase it. Let your competition cut theirs. All great businesses move forward in a recession, and the others move backward.
* Information provided by The Clark Company and MarketSense
About Digital Sign Guys/The Big Screen Channel:
Digital Sign Guys is the industry leader in providing Digital Signage Solutions. Our goal is to help local businesses brand themselves through our indoor digital billboard network, increase sales with our in-store point of purchase displays, and give clients professional digital media for their displays as well as a professional website.
The Big Screen Channel Network is made up of strategically located large LCD TV screens in the area’s leading restaurant, fitness and leisure locations running 15, 20 & 30 second rich media ads 24 hours a day/7 days a week.
We offer several low cast branding solutions that will fit the need of your business. Please contact us for a meeting with a marketing specialist. Contact Kiera Newnam, Marketing Specialist, at 302-494-0757 or visit ww.digitalsignguys.com.
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