Increasing marketing spend in a slowdown?

Jane Simms of Director Magazine suggests: "This is a sort of Pavlovian response (a reflex from a distance) to falling profits, consumer confidence and consumer spending. The problem is, if it often exactly thew wrong thing to do."

Time for a refocus
Studies reveal that businesses that hold or refocus their marketing budgets perform much better than their rivals in the long term. Many business analysts agree that indiscriminate slashing of marketing budgets is not the answer to the economic downturn, and suggest that a re-examination of marketing spend is a more measured response.

In a study of US recessions, McGraw-Hill Research analysed 600 companies from 1980-1985. The results showed that business-to-business organisations that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were 'aggressive recession advertisers' had risen 256% over those that didn't keep up their advertising.

A cereal success
Another example comes from the Kellogg’s and Post cereal companies, who raced neck and neck in the 1920’s to dominate the breakfast cereal business. When the Great American Depression came in the 1930’s, Kellogg’s kept their advertising going while Post cut back. When the depression ended, so had the race between them as Kellogg’s emerged the dominant player, a position they have maintained to this day.

Brands do not seem to be reducing their advertising investment, instead they are investing money in the right media vehicles. They are weighing all the options and maximising returns. Recession has definitely forced advertisers to think about more effective advertising options. Forward thinking organisations will favour a re-evaluation of marketing budgets, rather than cutbacks.  Food for thought in tough economic times.

Marketing advice when advertising in a recession

• Mixed media spend packages (that encompass print, internet and email) are often more cost effective, and provide a wider reach than print only campaigns.

• Brands, products, and services that can position themselves as necessary and relevant, comfortable, environmentally friendly, wholesome, and nurturing have a real edge in this environment.

• Wherever possible, make sure the industries you are trying to reach are in good shape, such as the public sector. The vast majority of analysts expect this market to expand in a recession, so targeting markets that are growing should be the priority for most businesses.

• A recession can provide a well managed business with an opportunity to increase market share. If you drastically reduce your advertising spend, you are most likely to miss these opportunities.

• Marketing is most effective when promoting new products - this should be considered when marketing discounts on existing products - make sure you tell your audience what new offerings you have.

Useful links
Chartered Institute of Marketing
Periodical Publishers Association