"Advertising
is salesmanship mass produced.
No one would bother to use advertising if he
could talk to all his prospects face-to-face.
But he can't.”
Morris Hite
American Advertising Specialist
“Does it pay to advertise in a recession ?” is a challenging questions.
Organisations often cut their advertising spend in recession. It is relatively easy to do so.
Take
for example The UK Government after the
2010 election it began to cut its £520 million-a-year spend severely. Yet many of its initiatives for small businesses have not been taken up because few know about them.
Adweek
itself has taken awhile to develop from its New York version 10 years ago
Perhaps
the” UK ad industry has not done enough to champion itself” suggested the
Evening Standard’s Gideon Spanier on Wednesday this week.
Amid all the self congratulatory fizz such
events entail a warning came from Sir Martin Sorrell who said “ We do undersell ourselves but we are in
danger of thinking we're the bee’s knees”. Sir Martin is thinking in particular
to the challenges from Brazil, China and elsewhere.
The advertising industry is
central to the creative industries in UK. It provides a third of all TV revenues and two-thirds of newspaper
revenues; it supports sectors from photography to film production.
Deloitte estimate that over 550,000 people
work in jobs that are funded by advertising revenues, or involved in the
commissioning, creation and production of advertising across the relevant
supply chains.
However, the overall impact of
advertising is far broader. It has a critical role in making the UK economy
function. Advertising is at the hub of a economic wheel of competition,
innovation and market expansion, to the benefit of both consumers and businesses.
Does
history show any evidence that advertising is advantageous in tough times?
Here
are 7 ‘exhibits’ from back in the day up to present day
Exhibit
1 : In a McGraw-Hill Research analysis of 600 different companies: B2b firms that maintained or increased their
advertising expenditures during the 1981-82 recession averaged significantly
higher sales growth, both during the recession and for the following three
years, than those that eliminated or decreased advertising. 3-years after the
recession, advertisers had risen 256% over those that didn’t
keep up their advertising.
Exhibit
2: Analysing the 1990-91 recession, Coopers and Lybrand ( PWC of old) research found that
better performing businesses focused on a strong marketing programme enabling
them to secure their customer base, take business away from less aggressive
competitors, and position themselves for future growth during the recovery.
Exhibit
3: A recession can provide an opportunity for businesses to build a greater
share of market through aggressive advertising – Strategic Planning Institute
of Cambridge, MA
Exhibit
4: Advertising aggressively during recessions not only increases sales but
increases profits (this has held true for all post-World War II recessions
studied by American business press starting after WW 2)
Exhibit
5: Advertising can give a company a stable image in a chaotic environment. The
more familiar people become with a brand, the more favourable they feel toward
it, and the more likely they are to buy it. People don’t like doing business
with strangers.
Exhibit
6: History shows that companies that do best during hard economic times
do so by continuing to communicate with customers and build their brands
regardless of economic conditions
Exhibit 7: Deloitte’s 2013 report for the
Advertising Association “On average, £1 of advertising spend generates £6
for the economy.
That means the £16 billion spent on UK advertising in 2011 generated
£100 billion in the UK economy.”
Advertising enables businesses to deliver more innovative
and higher quality products and services.
It helps to match buyers and sellers more efficiently,
allowing firms with new ideas to succeed more quickly and differentiate
themselves through the quality of their offer to consumers.
When
times are good, you should advertise.
When
times are bad, you must advertise.
It really
does pay to advertise during a recession
“The codfish lays ten
thousand eggs.
The homely hen lays one.
Codfish never cackles to
tell you what she has done.
And so we scorn the
codfish,
while the humble hen we
prize,
which only goes to show you
that it pays to advertise!”
―
Nikhil Sharda
Related
links
Read excellent and interesting report @ad_association @Deloitte
David
Lamourex
