What's New In Marketing

Advertising in a Downturn

"On Hold."

That seemed to be the overwhelming response echoing around the business world. It seems that no matter how the question is phrased, the reply is almost always, "the decision is currently on hold."

Recently, Economists are often heard stating that "if we are not careful, we will talk ourselves right into a recession." If we're not careful, we are going to put the economic rebound "on hold."

As marketers, it's important to understand that "not making a decision" is, quite frankly, a decision itself. Markets are not static and they are not going to wait for you to attain a higher comfort level before making a decision. Those who see today's situation as an opportunity, and who proceed with the implementation of their well thought out marketing campaigns are the ones who will emerge as the main winners when local, regional and global economies make their respective moves to the up side.

You have two choices in today's climate: a) be an "Ostrich Marketer" and stick your organizational head into the sand awaiting confirmation that the market rebound has occurred, or b) be an "Eagle Marketer" and use your long-term, wide-horizon perspective to get yourself positioned to take advantage of the market up turn AT THE START of the up turn.

To help you become Eagle Marketers, I've dusted off some old research results I used when selling advertising space for TIME Magazine back in 1986-87 when several of our clients were facing an economic slow down.

In one report conducted by the American Business Press, titled "How Advertising in Recession Periods Affects Sales," the relationship between advertising and sales in 143 companies during the severe 1974-75 downturn in the U.S. was examined. The study found that those companies that did not cut advertising in either of the negative growth years had the highest growth in sales and net income during both the two recessionary years AND the following two years.

This same study also showed that companies that did cut advertising expenditures during the two bad years had the lowest sales and net income increases both during the two bad years as well as in the subsequent two years.

In a famed study conducted by McGraw-Hill of both the 1974-75 and 1981-82 recessions, the long-term advantages of maintaining a strong advertising presence during weak economic conditions was again confirmed. This study found that companies that cut advertising in the 1981-82 period increased sales by only 19% between 1980 and 1985. However, those companies that continued to advertise during the 1981-82 downturn enjoyed a 275% sales increase over the five year period 1980 to 1985.

Lastly, in an industry-specific study published by the Harvard Business Review ("Advertising as an Anti-recession Tool," Jan/Feb 1980), the researchers found that airlines that increased their advertising expenditures during the 1974-75 recession increased sales and market share in both years, while those airlines that reduced advertising lost both sales and market share in both years.

The results of all three studies are consistent and clear -- companies that advertise during a recession end up with greater sales than companies that reduce or eliminate advertising investments.

One of the best ways to minimize the impact of a downturn on your own business, and to maximize your opportunities to take advantage of the subsequent upturn is to maintain a strong marketing and communications link with your customers, prospects, business partners, and the general buying public.

This is not a time to be an Ostrich Marketer.

Be an Eagle Marketer. Soar above your competition. Exhibit market leadership. Fly away with increased sales and market share.

Your marketing investments today will be repaid many times over FROM THE START of the economic rebound.

TOP TIPS:

1. One of the best ways to maximize your opportunities is to maintain a strong marketing and communications link with your customers and prospects, especially during slow growth periods.

2. Do you see advertising as an expense or an investment in tomorrow's sales and market share?

3. If your competition has gone quiet, why not take advantage of this by raising your awareness with key customers and prospects? You won't need as large a communications budget to shout louder than a competitor who has now gone quiet.

4. How are you getting ready to benefit from the START of the economic rebound? You can't win a car race if you begin the race after everyone else has driven five laps. Likewise, you cannot win the marketing battle if you give your competitors a five-month, or even a five-week, jump start when the economy rebounds.

Steven Howard is a leading positioning and marketing specialist and the author of "Corporate Image Management: A Marketing Discipline for the 21st Century."

Contact: sbhoward@singnet.com.sg