Enterprising Thoughts

• Advertising During A Recession

  Published on March 15, 2011.

  If we pay attention, much can be learned about marketing from our current and hopefully declining recession.

  Ad agencies have forever recommended that companies should not decrease advertising investments during economic downturns. In fact, a strategy of increased ad spending to gain customers from competitors who decrease their advertising budgets is not infrequently urged by marketing experts.

  A favorite recession case history from a “distant past” recession is how Pepsi gained share of market at Coke’s expense when the former increased and the latter decreased advertising.

  But most companies took the easy route to preserving the bottom line by reducing, if not eliminating, the cost of advertising and public relations. The smarter ones made different decisions.

  While corporate advertising spending declined substantially worldwide during the “Great Recession,” successful companies such as Unilever and P&G maintained their budgets with positive results.

  General Mills actually increased ad expenditures over the past several years and achieved significant sales and profit increases as customers abandoned restaurants to dine at home more often.

  One expects that these companies will maintain brand loyalty when the recession finally ends. During the recession, brand loyalty was an early casualty, and budget retailers Wal-Mart and Dollar General took advantage by attracting customers from mainstream supermarkets. Expect them to adjust their marketing messaging in an effort to retain those new customers post recession.

  Another recession victim was trust. Financial services firms, including big banks, may never regain the consumer confidence they once enjoyed. They will need to overspend in PR and advertising in the effort. Other companies that are experiencing a decline in trust likely could have avoided that with advertising messages that anticipated and spoke to their customers concerns. Instead they reduced or eliminated their messaging.

  Certainly an increase in advertising expenditures will signal the beginning of the end of the Great Recession, but don’t expect your daily newspaper or national news weekly to get thicker. Advertising spending has been inalterably shifted from traditional media to new electronic and Internet outlets.