Advertising in the face of recession: History shows it works

Written by David Bohan: ‘Marketing Matters’ column that appears twice a month in the business section of The Tennessean.”

 

“Early to bed, early to rise, work like hell and advertise.”

 

That was the marketing mantra of Cohen Williams, patriarch of Martha White Foods. In times of economic uncertainty, it is especially smart to heed this sage advice.

 

It might sound insane right now—considering the decline in consumer confidence, the perils in the financial and housing markets and the slowdown in retail spending—but this is a great time to be in marketing.

 

Historically, companies that take aggressive action during recessions win.

 

A Profit Impact of Marketing Strategy (PIMS) study found that marketers who maintained or increased advertising expenditures in a recession bounced back stronger than those who hunkered down and lowered their voices. Their market share grew three times higher than brands that cut spending, and their profits were five times stronger in the first year of economic recovery.

 

An American Association of Advertising Agencies study found that companies with even modest increases in marketing and advertising spending during the last recession saw gains in market share.

 

A tough economy is also a fertile time for innovation and for introduction of new products. An example is one that has lasted for decades, television’s venerable “soap operas.” Proctor & Gamble piloted this new entertainment medium during the Great Depression to help sell laundry detergent, hence the very name.

 

The 1974 recession lead to creation of the discount brokerage industry with Charles Schwab.

 

Cable television networks CNN and MTV were launched during double dip recessions of the early 1980s, and airlines’ now-ubiquitous frequent flier programs were a marketing tactic born of the same economic downturn.

 

Apple’s iPod was introduced at the depth of the tech-bust “dot bomb” period. While not immediately successful, the iPod’s impact on the music industry has been profound.

 

Advertising Age columnist Jack Neff offers five tips for marketers who want to survive in tough economic times.

 

First, don’t cut the marketing and advertising budget. Maintaining or even increasing spending can create opportunities in times when the overall level of spending may be dropping. Your message will more likely be heard during times of less noise.

 

Second, maintain strong new product launches. Will history repeat itself with another category-changing introduction such as the discount brokerage or the iPod?

 

Third, beware that discounting can be addictive. Did Taco Bell’s under-a-dollar value menu that was introduced in the early 1990’s forever brand it as a place for cheap food? Discounting as a tactic can be effective. Discounting as a strategy is potentially dangerous.

 

Fourth, if you have a new product or service to introduce, make sure it fits the times.  Ideally, something new in bad economic times recognizes the recession’s reality and provides a remedy to a problem. 

 

Fifth, you can’t go wrong with diversion. If times are difficult, give people something to take their minds off the current economic storm. Promotions and messages need to be upbeat.

 

So whether you are selling flour, furniture or real estate, get a good night’s sleep, and you might find some “Hot Rize” when you get up.

 

Written by David Bohan-Bohan Advertising/Marketing