Whenever a crisis arrives, advertising can seem like the easiest expense to cut. In this situation, remember a popular idea attributed to Charles Darwin: it is not the strongest or most intelligent that survive, but those best able to adapt to change.
What many business owners do not immediately realize is that continuing to invest in marketing and advertising—including product promotions—during a recession can benefit the business.
Research suggests that a recession can be one of the best times to invest in advertising. Why?
What are the effects of cutting the budget?
Since the beginning of the twentieth century, history has shown that well-planned advertising can increase sales even during a recession. A 1927 Harvard Business Review study found the greatest sales growth among companies that advertised most heavily during the 1923 recession.
An example of this is that during the Great Depression, General Motors ran an aggressive radio advertising and billboard campaign to push their budget brand
A Buchen Advertising Inc. study covering the recessions of 1949, 1954, 1958, and 1961 confirmed the trend: sales and profits fell sharply for companies that cut advertising, and after each recession those companies were outsold by competitors that maintained their budgets.
Data from the 2008 recession shows that many companies struggled to regain market share after reducing advertising spend.
The studies point to similar results: savings from cutting the advertising budget may be outweighed by the resulting decline in sales.
When reallocating finances during a crisis, cutting advertising may look like the easiest option, but it can backfire. Consumers still notice advertising during a recession, and companies that keep investing are often best positioned when the difficult period ends.
