Advertising in a Recession
When times are tough, it’s easy to panic and keep a tight lid on spending. While that may be a wise strategy for a family or individual’s budget, it’s not a wise one when it comes to your business and its marketing budget.
In fact, when other businesses decrease their advertising spend, also known as "going dark", it presents an incredible opportunity for the businesses that take the opposite approach and maintain or increase their advertising budgets.
It’s not easy. It takes guts to do. But history shows that companies that do this are very well rewarded.
In good times or bad, if people can’t find you, if they don’t know you exist, if you don’t remind them you exist, it doesn’t matter how good, affordable, convenient, etc. you are - they can’t buy from you.
“Going dark’ is a decision that shouldn’t be taken lightly. The long-term outcome will offset any potential short-term gains and savings.
Reducing advertising spending and media presence can amplify the negative consequences of the recession and compromise future sales.
Especially in tough economic climates, if you put your company in hibernation mode there’s a good chance it won’t wake up.
In fact, when other businesses decrease their advertising spend, also known as "going dark", it presents an incredible opportunity for the businesses that take the opposite approach and maintain or increase their advertising budgets.
It’s not easy. It takes guts to do. But history shows that companies that do this are very well rewarded.
In good times or bad, if people can’t find you, if they don’t know you exist, if you don’t remind them you exist, it doesn’t matter how good, affordable, convenient, etc. you are - they can’t buy from you.
“Going dark’ is a decision that shouldn’t be taken lightly. The long-term outcome will offset any potential short-term gains and savings.
Reducing advertising spending and media presence can amplify the negative consequences of the recession and compromise future sales.
Especially in tough economic climates, if you put your company in hibernation mode there’s a good chance it won’t wake up.
Recession spending in action
The Great Depression of the 30’s
Generally speaking, those companies that not only survived but also thrived during the Great Depression were those that continued to act as though nothing was wrong and that the public had money to spend.
In other words, they advertised.
These are industries that didn't wait for public demand for their products to rise. They created that demand even during the most difficult of times.
Because so many companies cut spending during the Great Depression era, advertising budgets were largely eliminated in many industries. Not only did spending decline, but some companies actually dropped out of public sight because of short-sighted decisions made about spending money to keep a high profile.
Advertising cutbacks caused many customers to feel abandoned. They associated the brands that cut back on advertising with a lack of staying power. This not only drove customers to more aggressive competitors, but it also caused financial mistrust when it came to making additional investments in the no-longer-visible companies.
Generally speaking, those companies that not only survived but also thrived during the Great Depression were those that continued to act as though nothing was wrong and that the public had money to spend.
In other words, they advertised.
These are industries that didn't wait for public demand for their products to rise. They created that demand even during the most difficult of times.
Because so many companies cut spending during the Great Depression era, advertising budgets were largely eliminated in many industries. Not only did spending decline, but some companies actually dropped out of public sight because of short-sighted decisions made about spending money to keep a high profile.
Advertising cutbacks caused many customers to feel abandoned. They associated the brands that cut back on advertising with a lack of staying power. This not only drove customers to more aggressive competitors, but it also caused financial mistrust when it came to making additional investments in the no-longer-visible companies.
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Here are some classic examples of companies that thrived in the Great Depression:
Procter & Gamble To this day, P&G maintains a philosophy of not reducing advertising budgets during times of recession, and the company certainly did not make any such reduction during the Depression. It's not a coincidence that P&G has made progress during every one of the major recessions. While competitors cut ad budgets, P&G increased its spending. While the Depression caused problems for many, P&G came out of it unscathed. Radio took P&G's message into more homes than ever, and P&G became a pioneer in effective use of that medium, including its role in creating the notion of soap operas. Chevrolet During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and, by 1931, Chevrolet took the lead in its field. It is believed that Ford's weaker balance sheet entering the Depression rendered it unable to respond to Chevrolet. Camel Cigarettes In 1920, Camel was the top-selling tobacco product. American Tobacco Co. then struck back with the Lucky Strike brand, and by 1929 Lucky had overtaken Camel as the No. 1 brand. Two years later, in the heart of the Depression, Chesterfield also overtook Camel. Camel countered with a dramatic increase in ad spend and, by doing so, demonstrated the power of advertising during depressed times. By 1935, it was back on top. Click here for source and more interesting stuff. More sources and good stuff here. |
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Be fearful when others are greedy, and greedy when others are fearful.
- Warren Buffet -