by Timothy vonBecker
Who Spends Marketing $$ in a Downturn? Successful Companies!
Strong marketers know that the only advertising worthy of expense is that which has a future value. Likewise, sound marketers know that sales increases are not attributable solely to clever advertising, but are derived from overall economic conditions, demand, company position, and product innovation. In each of the downturns of the 20th century, there were industry competitors who were diminished – or who ceased to operate. And, during those same times, there were competitors who understood that marketing and advertising activity were an investment for the future. These companies knew that advertising expense could no sooner be cut entirely than could the entire relationship with all financial institutions or other critical suppliers. If there are wholesale cuts to be made in marketing and advertising, let it be that of your competitors' budgets.
"Marketing expenditures in areas from communications to research are often slashed across the board—but such indiscriminate cost cutting is a mistake. Although it's wise to contain costs, failing to support the brand or examine core customers' changing needs can jeopardize performance over the long term. Companies that put customer needs under the microscope, take a scalpel rather than a cleaver to the marketing budget, and nimbly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than others to flourish both during and after a recession." – (John A. Quelch and Katherine E. Jocz, Harvard Business Review, April 2009).
It is common knowledge that many popular consumer brands – the ones we still know today – experienced share gain during a recession and top-line growth within the first year after a recession by following the practices of maintaining measured amounts of marketing expense (some were bold enough to increase expenses during a recession). MarketSense studies reveal that Jif Peanut Butter, Kraft Salad Dressing, Coors Light and Bud Light (to name only a few) increased their advertising expenses during the recessionary period of '90-'91 and experienced sales growth of 57%, 70%, 15% and 16% respectively in the periods just after the recession. Most recently, Audi reported in the February issue of Advertising Age that it will increase its 2009 advertising budget by 15%, specifically to take advantage of a soft advertising spending market.
Fresh product for fresh challenges
Just as the origins of a downturn are unique, so are the outcomes and the resulting business models. Sweeping generalizations are ill advised when comparing one economic downturn to another. However, by observing former periods, we can be certain in the general notion that our resulting economy, markets and business models will be changed greatly by this recession. Each former recession has made some business models obsolete, while introducing opportunities for new ways to go to market. We know that a market will continue in some form. We know that the competitors with the best product, supported by the most efficient operations, and the most efficient and accountable marketing will succeed to the greatest degree. We also know that a recession chases the fat out of a market. And, in the most serious downturns, only the most shrewd and agile competitors (those who make their own luck) survive... or originate. Recall that in the midst of the despair of the 1970s, Apple and Microsoft were created – two companies that most will agree have changed the world and offered an entirely new set of economic opportunities. The ingenuity of strong entrepreneurs will shape our new realities – in each company, in each department. Each new effort need not be as classically monumental as Microsoft. Rather, every small innovation in a business approach that creates new opportunity is revolutionary in its own right. And when aligned properly by management, a number of small innovations are indeed the source of revolution. As Mark Twain suggested, history rhymes. That is, those products and marketing plans that are designed with the new economic realities in view are those that will succeed. Applying resources now with creative and measurable programs is the way to test and discover how new market models will function in the new, uncertain reality.
BRICK strives to be a marketing “partner” in the new economic reality. Our creative efforts – as part of your marketing efforts – can enhance your revenue opportunities. We can't wait to meet the fresh advertising challenges of the new economy.
