Friday, 22 March 2013

Deloitte ,Advertising Association Report and the selling challenges from Adweek 2013

 "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

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