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Statistics On Advertising During a Recession

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I think Seth Godin outlined marketing's Catch 22 best in his book The Purple Cow (and I am paraphrasing here): When times are tough the tendancy is to conserve capital vs. when times are good the tendancy is to not be aggressive.


As marketers we are so often faced with the dilemma of having to cut advertising in times of economic softness. But here is some real data that you can use to illustrate why that is a bad idea.
McGraw-Hill Research study of over 600 Businesses found that:
1981-1982 .... business that maintained or increased their ad spend during this time
* Averaged higher sales growth during the recession and in the following 3 years!
By 1985 .... sales of the businesses that maintained or increased their ad spend during that recession
* Sales had risen 256% over those that had cut back on advertising
Likewise in 2001 .... another study found that aggressive recession advertisers
* Increased market share 2 ½ times the average for all businesses in the post-recession
In 2002 .... the Strategic planning institute illustrated that during economic expansion
* Although 80% of businesses increased their advertising spend there was NO improvement in market share
* Why? - because everyone has increase ad spending!
Full Disclosure: I got these stats from a paper called Innovating through a Recession by Professor Andrew J. Razeghi at the Kellogg School of Management at Northwestern University. Not only did I thank him for writing this paper, blogged about it, tweeted it but I also invited him to do a podcast with me so stay tuned!


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Paul Dunay is director of global field and interactive marketing for Bearing Point (www.bearingpoint.com).

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Comments

  • by Michael Goodman Fri Nov 21, 2008 via blog

    While I certainly agree that recessions are a good time for marketers to maintain or increase their share of voice, it's just as important to adjust the message and the offer to reflect the giant elephant in the room -- consumers' and customers' need for safety. Simply maintaining, or even increasing, spending will probably be a lot less effective than doing so against a message that's tailored to the economic environment.

  • by Brett Duncan Fri Nov 21, 2008 via blog

    Great stats, and thanks for passing along the reference. I'll be chewing on that for a few days. The bold and innovative can thrive in a recession. I think the key is in how you've encouraged your customer base to "need" your products (rather than simply "want") prior to the recession. They are going to cut back on the things they want, but they will keep buying what they need. So the winner becomes the company that continues to put those "needs" in front of them when they need it most.

  • by Brian Moriarty Fri Nov 28, 2008 via blog

    The proposition is very similar to that of investing...buy when the market it down, sell when it is up. As rational as it is, most companies and investors can't pull it off due to the perceived risk and desire to alleviate the pain. Emotions tend to win out over rational thinking...go figure.

  • by Helena Collins Fri Nov 28, 2008 via blog

    I agree, this is the first time I am aggressively growing my business and marketing, in a slow down it is easier to be recognized as a big fish in the proverbial small pond. No guts, no glory :)

  • by Steve Stroum Sun Nov 30, 2008 via blog

    Slow economic times present an excellent opportunity for companies to increase market share. Prospective customers are more receptive to change during tough times. Effective marketing will put you in front of them when their needs arise. And when good times return, they are more likely to stay with you. Our clients have experienced this in prior recessions and so have we.

  • by Sheharyar A. Siddiqui Thu Dec 11, 2008 via blog

    its Sherry from Pakistan.with all the trouble in this part of the world(Recession,political instability,war on terror,terrorism,growing tensions with India) What should we do as a multinational team who rely largely on imports,which the import duty has doubled. What would u advice me?

  • by Cheap WoW Gold Mon Mar 2, 2009 via blog

    The recession really is affecting everyone globally. Everyone should be helping each other to make it through, specially the government. I hope the recession ends soon.

  • by John Gillett Fri Mar 6, 2009 via blog

    Excellent advice...unfortunately, it appears only the biggest players realize the benefit of aggressive advertising in slow times.

  • by eq2 plat Thu Mar 12, 2009 via blog

    These points are great. Really helpful specially we are undergoing through this recession.

  • by sayem Wed Jun 3, 2009 via blog

    recession is a challenge for our today economic condition. but i think advertising is key to overcome this problem....for those people who r think that advertising is investment

  • by Jacob Thompson Thu Jan 13, 2011 via blog

    I agree that marketing is an important part of getting us out of this recessiion but I am not sure that it will save us by the way this was a great blog

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