Why You Shouldnt Cut Advertising In A Bad Economy
While it may go against your intuition, statistics show that the most important time
to spend dollars on advertising is when you probably have the least amount of money to spend. Consider the following:
* In the 1974-75 recession, the American Business Press surveyed nearly 150 businesses of varying sizes and found that those who continued to advertise had the biggest net growth.
* For the last 100 years, the average recession has only lasted 11 months.1
* During the 1981-82 recession, McGraw-Hills research showed that companies that cut advertising saw their sales grow 19% after the economy got back to normal. They also found that companies that maintained their advertising budget during the recession saw their sales jump 275% after the recession.1
* As a contrast, the Strategic Planning Institute did research in 2002 that showed that during an economic expansion, businesses did not significantly grow, even though 80% of businesses increased their advertising spending.2
Why It Works
One of the main reasons advertising in a down economy works is that very few companies actually do it. When managers look to cut costs, they usually identify advertising as a non-essential expense. Because many companies will drop off the advertising landscape during this time, youll have to do a lot less to stand out from the competition if you keep advertising. When consumers look for your product, you could be the only one they see. Whether the economy is poor or healthy, people still need auto care, hair cuts and groceries. And even though people do cut down on non-essential products and services during a recession, they will see your ads and keep you in mind when they finally are in a position to spend.
Advertising is also generally much cheaper during a recession. Television and radio stations, magazines and newspapers all still have to run advertising, even when the economy is poor. Because demand for advertising is down when the economy is slow, these media outlets usually offer much better deals.
Buying ads when nobody else is can give you opportunities to build great relationships with advertising account executives because youll be one of their few loyal clients during a recession. This relationship can carry over when the economy bounces back, helping you get more perks even when the advertising market is crowded again.
Where You Should Focus Your Efforts
If you do decide to advertise during a recession, remember to target your dollars even more than you usually would. It is OK to address the economy in your ads. People want to know how you can help them through a tough time.
Let consumers know why they should buy your product even when they may not have as much disposable income as theyre used to. One great way to do this is to point out how you can provide value over the long run. You could point out that your appliance should last 10 years longer than the competitors or that your service will improve gas mileage.
Finally, consumers are looking for bargains during a recession. They are spending much more carefully, searching for coupons and special deals. Give them what theyre looking for and theyll reward you with their business.
This article is presented by the Academy Chicago.
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