There is an old saying in the news business that “if it bleeds, it leads”. It means the worst news of the day will lead at the top of the newscast. Negative news gets the most attention. And so it is with the economic news of the day.
When the going gets tough, there is a natural tendency to cut costs. Advertising is often the first target for cuts because it is hard to measure and difficult to understand. Advertising seems like an easy cut to make, it is an intangible. You don’t have to fire anyone and your staff will hardly notice. It’s not like cutting the budget for office coffee. Cutting out your advertising is an easy decision. You can just cut back for the time being and then pick it back up when things get better.
While cutting your advertising budget may seem like an easy answer, it could very well be the most costly decision you will ever make. Almost universally, cutting back on your advertising will lead a company to have real troubles in the coming years. It could be fatal.
When consumers face challenging economic situations, buying habits change. This creates new opportunities for the business that hangs in there and keeps advertising. People are still spending money but now they are making new ‘value’ decisions. People are looking for new answers to their problems. They are open to new suggestions, like shopping with you for a change.
Business goes where business is invited. Your advertising dollars can actually go much further than ever before, especially when your competition cuts back. You’ll have a larger share of market awareness or “mind share”. It is a proven fact that mind share leads to market share. The consumers need to know you before they need you. A majority of consumers say they are likely or very likely to do business with the first name they think of when they have a need or a desire for a product or service.
Companies that increase their advertising during a slow economy actually grow significantly faster than firms that maintain or decrease their advertising. Companies that invested more in marketing in in slow times realized a 4.3% increase in their Return On Investment. Companies that increase their advertising during slow times gained market share three times faster in the two years following a recession than those companies that cut their advertising budgets.
So, where do you go from here? Simple, you should advertise both in good times and bad.
American Business Media found that maintaining your advertising in an economic downturn has a direct impact on current and future sales and that maintaining market share costs much less than rebuilding market share later on.
According to Coopers & Lybrand, advertising during an economic downturn enables you to solidify your customer base, take business away from less aggressive competitors and positions you for future growth during the recovery.
Advertising is a lot like exercise. You have to pick an exercise routine and stick with it for the long run to be healthy and fit. When you stop, you get out of shape and become non competitive. Make sure your business remains fit, in shape and competitive. Stay the course.