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WHAT PREVIOUS RECESSIONS HAVE TAUGHT US ON ADVERTISING

Interviews & Opinions

As the coronavirus continues and lockdown extends, brands must adapt a digital narrative in order to prepare a successful survival plan.

Whilst some marketers maybe reluctant to increase their budgets during these uncertain times, reports reveal that such recessionary periods actually provide fertile grounds for brands to grow their market share, if they are prepared to think about long-term. 

The world has changed, but peer to peer recommendations have always been and will continue to be the most powerful form of marketing.

So in order to make sure you don’t get left behind, continue reading to find out why media budgets are expected to rise by 42% as brands focus on building a mission based approach for their talent-led content strategies in order to reach the isolated consumer efficiently & effectively.

 

THE POWER OF INCREASED ADVERTISING IN A RECESSION

Studies suggest that companies which increased their ad budgets during the 18-month recession, caused by the economic hangover of the First World War, actually grew their sales faster than their competitors.

In fact, companies that decreased their advertising spend saw their sales decline both during the recession and then for the following three years.

Since this original report, made by Roland Vaile who completed his Masters at Harvard in 1924 – many have continued this analysis over the century and all in turn sustain his premises, which is that when maintaining or even increasing ad spend during a downturn is invariably the right thing to do because it sets a company up to survive the downturn (a little) and then prosper (a lot) in the period that follows.

These results are reflective across all industry sectors, as proven by Stephen King who observed the same patterns after examining performance when working with fellow WPP scholar Alex Biel, King examined the performance of 390 firms listed on the PIMS (Profit Impact of Marketing Strategy) database during recessionary periods. The authors divided their sample into companies that decreased ad spend, increased it by less than 20%, or increased it by more than 20%.

As such, it’s clear that brands need to avoid repeating past mistakes and follow best practice, because ultimately cutting advertising spend to increase short-term profits, doesn’t work.

GROWING MARKET SHARE IN A RECESSION

“The gangster move in a recession is not just to maintain the budget but actually increase ad spend. That sounds like a lunatic move until you understand ESOV and the dynamics of long-term brand building. It’s one of the smartest plays in advertising and the reason why the likes of Kellogg’s, Procter & Gamble, Lucky Strike, Toyota and Colgate all have a special chapter in their corporate museums devoted to a specific recession and the way their forebears held their nerve, increased marketing budgets, and won the decade that followed as a result.”

So, why does a recessionary period despite being such a paradoxically fertile period actually grow your market share?

Marketing professor Gerry Tellis revealed this answer within his journal of advertising research which examined more than 40 empirical studies of the impact of advertising on sales during and after a recession.

Within his critical review and synthesis, Tellis explains that: 

“Most firms tend to cut back on advertising during a recession. This behaviour reduces noise and increases the effectiveness of advertising off any single firm that advertises. Thus, the firm that increases advertising in this environment can enjoy higher sales and market share.”

A TACTICAL APPROACH

A select few are preparing a tactical move that could set them and their brands up for the next decade. Specifically, these better marketers know four very important things, of which all show an unprecedented opportunity to increase advertising and grow market share.

1. Advertising has both short and long-term effects. These longer-term effects can take several years to fully manifest and they are largely invisible in the immediate.

2. Less able marketers will now cut their ad budgets because their boss told them to or because they actually think that the savings from killing a campaign will be superior to any impact that advertising would have generated.

3. By maintaining ad budgets at current levels this year and next, the same investment will have a much greater impact because competitors have either gone bust and stopped advertising or reduced their ad spend significantly – see point two.

4. Ramping ad spend back up when the recession ends is relatively pointless because  it takes time for advertising to achieve its ultimate, longer term effects.

YOUR SUCCESSFUL SURVIVAL PLAN

The above results conclude that there are few things more proven in the world of marketing than the power of advertising in a recession.

Therefore, now more than ever brands need to adopt talent-led content strategies that spark engaging conversations, drive positive brand perception & deliver real results.

If you would like to find out how we can help you, reach out today:

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Cover Image Credits

Original Article First Published on Marketing Week by Mark Ritson

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