• Advertising in an Economic Downturn

• Consumer Confidence: Economic unrest has led to cautious consumer spending, but it doesn't mean consumers STOP spending. They become choosier. Consumers look for brands they know. They shop the competition for the best value.
• Top 3 Reasons to Advertise in a Slow Economy:

1. No better time to increase share of voice and top-of-mind awareness as less aggressive advertisers leave the door open to consumer brand switching.

2. Maintaining market share is less expensive than trying to rebuild it later

3. Studies show that increased spending in a slow economy leads to long-term profitability. 

•  Maintaining Advertiser Share of Voice: Counter -intuitive as it may sound, marketers who maintain or increase advertising budgets during a recession realize growth in sales and long-term market share over less aggressive competitors. The proof is in the history of past recessions.
• 2008 Impact: AD CUTBACKS BACKFIRED FOR BANKRUPT COMPANIES. "There's a growing body of evidence- and bankruptcy filings- to suggest that cutting ad dollars can be the ultimate false economy.

Company -  Media Spending Cut in '07  -       Filed for bankruptcy 

• The Proof is Historical: " I have yet to see any study that proves timidity is the route to success. Studies consistently have proven that companies that have the intelligence and guts to maintain or increase their overall marketing and advertising efforts in times of business downturns will get the edge on their timid compeditors" J. Wesley former Senior VP, Meldrum & Fewsmith
• Consumers Acted on Spending Stimulus: Consumers didn't save the 2008 federal economic stimulus tax rebates. They continued to spend: A study by the University of Chicago and Northwestern University, concludes that U.S. households are " doing a significant amount of extra spending" because of the $90 billion in government payments that have gone out so far." "... Households on average said they upped their spending on clothing and food by $92 combined due to the tax rebate. But entertainment spending rose by $87 and spending on durables increased by $91. The "other" category showed $178 in additional spending per household."    Wal-Mart Stores Inc. had a 5.8% jump in June 2008 sales for stores open at least one year, attributing the increase to the government's economic stimulus payments.
• The American Business Press analyzed the 1974-75 recession and found: Companies that didn't cut advertising during the 1974-75 recession experienced higher sales and net income during those years and the two years following than those which cut in either or both recession years.
• Cutting Advertising Means Negative Profit: American Press concluded cutting advertising in times of economic downturns can result in both immediate and long-term negative effects on sales and profit levels. Maintaining or increasing advertising budgets during recessions may be necessary to protect market position from competitors who consider advertising integral to the total marketing mix.
• McGraw-Hill analyzed the performance of 600 industrial companies following the 1981-82 recession: It found that business-to-business firms that maintained or increased their advertising expenditures averaged higher sales growth, both during the recession and for the following three years.
• Recession Advertising = Recovery Profits: Growth at companies who cut back on advertising during the recession stalled out during the recovery. Recession advertisers Kraft, Jiff, Bud Lite, Coors Lite, Pizza Hut and Taco Bell grew 17%-70% from 1989-1991. Jell-O, Crisco, Hellmann's, Green Giant, McDonald's, and Doritos cut their marketing budgets and dropped sales 26%-40% post recession from 1989-1991.
• RECOMMENDED STRATEGY: Protect your market share with your most effective and efficient dollars ... television advertising. Cut weight levels if necessary, but maintain or add weeks ...keep your message out there. Take advantage of lower-priced programs and periods. Target your best prospects... Local TV focuses geography to deliver results.

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