Advertising During Recession: Why You Should Keep Going

Advertising During Recession: Why You Should Keep Going

Advertising During Recession: Why You Should Keep Going

Advertising During Recession: Why You Should Keep Going

The entire world is in the midst of a healthcare crisis. But, this isn’t the only crisis that the world might face. There has also been talk about an economic crisis, a recession that might affect a lot of businesses and in turn, a lot of people’s lives. The last great recession happened ten years ago and when an economic meltdown of such a big magnitude happens, businesses, fearful of declining revenue, cut back in various areas which includes their marketing and ad spending. 

Ad spending in the U.S. dropped by 13% after the last recession in 2008. When looking at the different mediums affected, it was evident that newspaper ads were the most affected with a drop of 27%. Radio spending dropped by 22%, followed by magazines with a decline of 18%, out-of-home by 11%, television  by 5% and online by 2%.

What’s surprising is that there are a lot of studies that actually point towards this being a hindrance to companies. These studies show that the advantages of maintaining or even increasing ad budgets during a weaker economy far outweigh the negative aspects. Those advertisers that maintained or grew their ad spending increased sales and market share during the recession and afterwards. It’s not really surprising then as to why the following quote still holds good:

“When times are good you should advertise. When times are bad you must advertise.” 

 

Here are a few reasons why you need to advertise even during a recession: 

  1. Brands can project to consumers the image of corporate stability during challenging times. 

  2. Advertising costs reduce. This means that it’s a buyer’s market for brands. 

  3. Competitor brands and the ‘noise level’ that they bring into the market reduces. It’s a good time to take over the empty space. 

  4. This, in turn, will lead to an increase in “share of voice”. This further leads to an increase in “share of market.” An increase in market share results in an increase in profits.

 

Here are a few brands that benefitted by maintaining their ad budgets during economic downturns: 

  • Toyota: There was an energy crisis in the US from 1973-75. Since Toyota was experiencing strong sales, when the economic crisis hit, they resisted the temptation to drop their ad budget. Toyota surpassed Volkswagen as the top imported carmaker in the U.S. by 1976.

  • Pizza Hut & Taco Bell: After the 1990-91 recession, McDonald’s decided to drop their ad revenue. Pizza Hut and Taco Bell took advantage of this and increased their sales by 61% and 40% respectively. 

 

 

 

Yes, the natural reaction is to cut down on ad revenue but the advantages of actually moving forward can be numerous. The best quote related to this topic actually came from Wal-Mart’s founder Sam Walton. When asked, “What do you think about a recession?” he responded, “I thought about it and decided not to participate.”

 

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