Advertising During a Recession

Sometimes we need to remind ourselves what the short-term benefits of advertising are—during good times or bad—it creates sales immediately; it generates added business from current customers; and it brings in new leads and prospects.

Then there is the long-term benefit of advertising—it works cumulatively. The more familiar people become with a brand, the more favorable they feel toward it, and the more likely they are to buy it. In other words, people don’t like to do business with strangers. And, since the owners and staff of a company can’t personally meet all their prospective customers in advance, their advertising must do this for them.

Maintaining brand recognition should be considered an on-going business investment. The moment it stops—it begins to lose power immediately—and future sales are in jeopardy. Studies have shown that it takes four to six months to see the results of an advertising program. Cutting back during a down-turn is like throwing away your investment. Maintenance today costs much less than rebuilding tomorrow.

This doesn’t mean advertisers shouldn’t change anything. In fact, they should work to get the most out of their advertising dollars by eliminating emotion-based, image-building advertising and using instead informative ads that demonstrate their product’s superiority.

Perhaps the best reason to keep advertising during a recession is that it may actually provide an opportunity for companies to dominate their market. Many businesses make the mistake of assuming that because money is tight everywhere, customers will be spending less and therefore money spent on advertising will be wasted.

Another false assumption is that it’s safe to reduce the advertising budget if the competition is reducing theirs. However, research has revealed that companies maintaining or increasing advertising during periods of economic slow-down will boost market share. Some companies will even see an increase in sales over their competitors who decrease advertising.

As we enter what may become the recession of 2001, you can already see many leading companies increasing budgets.

Coca-Cola, for example, just increased theirs by $500 million. The benefit is clear, when fewer competitors are advertising, the ones that continue or increase their advertising become more visible to the consumer, and that could be you!

Wilson is a marketing consultant. His column appreared on the Newspaper Association of America Web site’s Retail Headlines for Sept. 2001.