How to Move Upward During a Downturn

There’s no doubt that the COVID-19 pandemic has created a recession. With businesses being forced to close or slow down operations and jobless rates increasing, we have been thrown into an economic downturn. The knee-jerk reaction by most companies is to cut back on expenses wherever they can, and that typically includes the marketing budget. In many cases, ad spend is the first thing to get cut.

If you’re tempted to do that, you may want to reconsider. You probably think that focusing on marketing when it seems no one’s buying is a mistake, but the opposite is true. That’s not just an opinion. It’s backed up by century-long historical examples of advertising during an economic downturn.



The Proof is In the Historical Pudding

The Advertising Specialty Institute (ASI) broke down the numbers of marketing during tough economic times going back to before the Great Depression. Every example shows that the smart move during a recession is to maintain—or even increase—your marketing efforts.

  • In 1927, advertising executive Roland S. Vaile reported his results of tracking 200 companies during the 1923 recession in the Harvard Business Review. He found that the companies that advertised the most during the recession actually increased sales by 20% compared to pre-recession sales. Those that didn’t found that their sales decreased by 7%.

  • During the Great Depression, while Post cereal cut its ad budget, Kellogg’s doubled theirs, increasing profit by 30% and becoming the leader in the cereal market.

  • Buchen Advertising tracked the advertising of a number of companies during the recessions of 1949, 1954, 1958 and 1961. They compared annual advertising expenditures vs sales and profits and found that almost all of the companies that cut advertising during the recession period suffered a drop in sales and profits, and, after the recession ended, also lagged behind companies that had not cut ad spend.

  • A 1979 study by ABP/Meldrum & Fewsmith found that companies that did not cut ad spending during the 1974-1975 recession had higher sales and net income during the recession and for two years following, compared to those that did cut spending.

  • After the 1981-1982 recession – at the time, the worst economic downturn in the U.S. since the Great Depression – McGraw-Hill analyzed 600 companies and found that those that maintained or increased advertising during the recession had a 275% sales growth by 1985 compared to the companies that did not.

  • During the 1989-1991 recession, a MarketSense study showed that the best strategy for coming out of an economic downturn on top is to balance long-term branding with promotions for short-term sales. Brands that proved this were Jif peanut butter, Kraft salad dressing, Coors Light and Bud Light beers, Pizza Hut and Taco Bell. Increasing ad spend during the recession for these brands all resulted in sales growth ranging from 15% to a whopping 70%. Meanwhile, McDonald’s cut its ad budget and experienced a 28% decline in sales.


Don’t Proscratinate – Innovate

More examples of marketing through a recession came to light during the 2008-2009 Great Recession, with innovation playing a huge role in company success. Instead of being afraid of the economic downturn, companies like Amazon thrived by continuing to innovate through it. The company’s sales grew by 28% in 2009 with the introduction of new Kindle products, which gave cash-strapped customers access to lower cost e-books.

Groupon is another example of innovation during a recession. It launched in 2008 and quickly gained popularity—and market share—by filling a need for consumers to save money on discretionary spending categories like eating out, something they may not have been able to afford otherwise. It also gave companies a new way to advertise and gain new customers.

The Time to Market is Now

It may seem risky, possibly even crazy, to increase marketing and advertising spend during a pandemic, but there’s no reason to think that this economic downturn is any different than the many our country has experienced throughout history.

At the moment, the market is prime for promotion. Online advertising has dropped during COVID-19, and so has the cost to advertise. The amount of media people are consuming has increased 48% during the pandemic, among audiences of all ages. If you take advantage of this downturn and increase your advertising:

You’ll be noticed. Since other advertisers are pulling back, the market is less saturated. If you advertise now, you’ll stand out more than before.


You’ll be remembered. When the downturn is over and everyone starts advertising again, you’ll most likely be top of mind with your audience.


You’ll tap into emotions. By sympathizing with the anxiety and concern of your audience and giving them options for either saving money or filling a physical or emotional need, your brand will get more attention and will be poised to gain loyal customers.

Yes, times are tough, but if you make the right moves—right now—you could be one of the companies that come out of the COVID-19 economic downturn on top. The former CEO of Burberry, Angela Ahrendts, once said, “I was taught to never waste a good recession.” My advice? Don’t waste this one.

Contact us to discuss how we can help you capitalize on, instead of capsize during, the current economic climate.

Sources:

https://www.forbes.com/sites/bradadgate/2019/09/05/when-a-recession-comes-dont-stop-advertising/#7f7478ce4608

https://spinsucks.com/communication/kellogg-marketing-global-pandemic/

https://www.forbes.com/sites/forbesagencycouncil/2020/06/29/marketing-through-mayhem-why-brands-shouldnt-cut-their-marketing-budgets-in-times-of-crisis/#732bd6dc6c60

https://www.asicentral.com/html/open/ProductsAndServices/supp/pdfs/Advertising_in_a_recession.pdf

Roland S. Vaile (Harvard Business Review, April 1927)

McGraw-Hill Research Laboratory of Advertising Performance (LAP), 1986

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