Business & Commercial Listings Sales Guide

Advertising In Tough Economic Times

By Darren Brown

Economic times have many businesses thinking twice before they spend their money. However, numerous studies, going back as far as the Great Depression, have shown that maintaining or increasing advertising during tough economic times yields greater results than advertising during good times. According to a recently released article titled, “Advertising in a Recession: In Chaos Lies Opportunity,” advertisers who can maintain or increase their advertising investment will see a greater impact in their advertising. During the recession of the early ’80s, research shows that firms that maintained or increased ad spending during those tough economic times enjoyed significantly higher sales growth, both during the recession and for the next three years versus those that eliminated or decreased advertising.

Nearly all of the studies underline what the great Albert Einstein once said, “In the middle of difficulty lies opportunity”. The same is true for advertising in a recession.

During slow economic times, many companies reduce what they consider nonessential expenditures. Unfortunately, one of the expenditures cut during a recession is advertising.

Reducing or eliminating advertising during a recession seems logical when funds are tight and a business may force layoffs or other equally unappealing options.

Cutting advertising to weather difficult economic times, however, is like bloodletting to cure a sick patient. Most of the studies over the years, some even going back to the Great Depression have shown that maintaining or increasing advertising during tough economic times yields greater results than advertising during the good times.

During a recession, advertising activity generally declines, which means that for advertisers who can maintain or increase their advertisement investment, the impact of their advertising is much greater. Advertising during tough economic times is akin to buying up underpriced stocks during a recession.

Here’s a sampling of the studies about the gains in profitability and market share that can be achieved by advertising during slow economic times:
 McGraw-Hill Research analyzed the performance of 600 companies from 1980 through 1985, including the 1981-82 recession. The analysis showed that firms that maintained or increased ad spending during the recession and for the next three years versus those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive advertisers during the recession had risen 256 percent over those that decreased their advertising investment.

 The 1993 report “Companies That Maintain Aggressive Marketing Programs Are Less Affected by a Recession” by Coopers & Lybrand and Business Science International concluded that “Businesses that maintain aggressive marketing programs during a recession outperform companies that rely more on cost-cutting measures. A strong marketing program enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery”.

 A 1990 study by the Center for Research and Development, and a similar 1980 study by Cahners Publishing, concluded that companies that maintained (or even increased) ad spending during a recession are best poised to increase market share.

In difficult economic times, businesses and consumers don’t stop spending money altogether. They do, however, spend it on brands or businesses with which they are familiar and comfortable. By aggressively advertising during an economic downturn, you can remain visible and legitimate to your customers, especially as your competitors pull back.
Darren Brown is President of Sales and Marketing for BUSINESS AND COMMERCIAL LISTINGS SALES GUIDE. To read the rest of this article including “10 Tips for Advertising During Tough Economic Times Now that You Know You Should”, Log onto www.commercialbizguide.com