The Advertising Edge

We are officially in the middle of a recession, which reminds me of something Sam Walton once said when asked how he would respond to a recession.  He simply replied, “I would choose not to participate.”

If asked how you would handle a recession, how would you respond?  Better yet, how have you already responded?  Have you followed the sage advice of Sam Walton and decided not to participate or have you dealt with this recession, lack of business, and general “tough times by deciding to stop your advertising?   The other option is to keep educating your customers with well-placed advertising messages and in the process choose to take this recession on by embracing the opportunities it presents.

Sadly, statistics show the first budget slashed is usually marketing when panic drives the reaction to a recession.  This happened in 1981, and history is trying to repeat itself again.  Sure, cutting advertising is a short term way to reduce expenses and for a brief period, this action provides a sense of relief. However, whacking away at marketing is no different than the decision to refinance a house to pay off maxed out credit cards.  Only this time it isn’t home equity being burned as a bail out, it is your hard-earned market share.

Here are a few examples of businesses that chose to buck the trend, be creative and brave, and get the most out of a good recession opportunity.

1. Kellogg’s® pushed their ads through the Great Depression; Post® didn’t. Guess who dominated the cereal market for the next 50 years. Can you say corn flakes?

2. Stanley® Tools launched its biggest ad campaign during the 1974 recession. Their consumer product division took off.  They grew at twice the rate of competitors every year thereafter.

3. In the recessions of 1949, 1954, 1958, and 1961, companies tracked for ad spending cutbacks saw sales and profits fall off.  Those who kept ad budgets saw profits increase and kept an edge in the years that followed.

4. Regarding the 1974 to 1975 recession, the study stated, “Companies that did not cut advertising expenditures during the recession experienced higher sales and net income during those two years and the two years following than those companies which cut in either one or both recession years.”

There comes a time in the life of any business when it has a downturn, when the customer count declines, when beating last year’s figures seems an impossible task.   However, studies show it takes five times as much money to attract a new customer as it does to keep the customers you already have.   Think about it and make the decision to keep letting your cusotmers know you are still in business by advertising.