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Data Says You Shouldn’t Stop Advertising In A Downturn

Don’t stop advertising in a downturn: the prescription is borne out by data from previous recessions. And some data shows that actually increasing advertising during a recession (assuming you have the resources) leads to significant business results long-term.

Let’s take a closer look at the data below, as well as your best alternatives to “going dark.”

Stop ads now and risk a 5-year-long recovery, research suggests

There’s no better playbook for what to do in a recession than data from the 2008-2009 crisis. And there’s no better authority on what all that data means than the researcher Peter Field and his highly regarded study Advertising in a Downturn. Given the current crisis, Field has made a few updates to his research, and offers recommendations to advertisers looking for advice about responding to the current crisis. Field summarized his advice thus: “Do not panic… and particularly don’t go dark. You will regret it at great length.” Why so ominous? Brands that stop advertising in a recession, the data suggests, create “a significant risk that can take up to five years to recover from, all while experiencing a ‘major loss’ of profit.”

The upside of continuing to advertise during hard times

Field’s analysis splits brand responses to the 2008 crash into three segments:

Cutters, those that reduced spend
Hangers-on, those that maintained
Opportunists, those that invested more

What were the results?

The opportunists enjoyed 5x more very large business effects compared to the cutters.

And here are the results of annualised market share growth throughout the 3 segments:

Cutters: 1.0%
Hangers-on: 1.4%
Opportunists: 4.5%

Other data supports Fields analysis as well. A study by McGraw-Hill Research analyzed the 1981-1982 recession, and found a 256% rise in sales among those companies that aggressively advertised during the recession compared to those that stopped investing.

Some of the world’s most iconic brands saw significant growth during recessions, depressions, and calamities. To mention just a few:

  • 1930s: Kellog continues to advertise throughout the depression unlike their cereal rival Post. Post gets crushed, while Kellog and it’s newly-unveiled Rice Krispies brand drives an almost 1/3rd increase in profits.
  • 1970s: Toyota barely trails Honda in fuel efficiency in a US report. Recession hits. Toyota’s selling everything it produces based on product strength alone, so executives are tempted to reduce ad spend. They decide against reductions, Toyota sticks to plan, and by 1976 it surpasses Volkswagen as the #1 US import vehicle.
  • 2008-2009: Amazon invests in product innovations , continues to double down on growth, and reaps the rewards: 28% sales growth despite a global recession. No surprise, the same company is poised to come out far ahead from the current crisis as well.

While not every firm will fit this scenario, data suggests that companies in a position to continue advertising should do so.

Brand vs. Performance: which works better in a downturn?

For those that do carry on advertising, what should be the focus? Many advertisers will be tempted to pad the balance books short-term. In other words, discounted product: sacrificed margins in favour of immediate revenue. Field argues this is a mistake. While there may be short-term revenue gains (though no guarantees), in the long-term this trains customers to expect discounts and product promotions from the brand and hurts profitability overall. What to do instead? Field thinks you should focus on share of voice. The point of advertising today, assuming that you can hold off panic, is to make sales easier next year. Additional lessons from the past on marketing in a recession suggest that those who are pressed to cut costs should consider spending less on creative and production value, while maintaining the frequency of advertisement. This may already be happening as a byproduct of social distancing orders. Furthermore, investing in awareness campaigns and retargeting will be the best alternatives to performance marketing while consumer behaviour is affected and driving down spending.

Ad content that works

Finally, if you are going to advertise to maintain share of voice and set your brand up for better sales next year, some ways prove better than others. What’s working well according to Field? While he doesn’t think brands should completely abandon existing campaigns, he says studies suggest ads should focus on humanity and community as opposed to ads on the self, self-image and performance. Research into changes in consumer personal values as a result of the pandemic show that Americans have started to value safety, security, and duty in significantly higher regard. On the other hand, values like pleasure, humility, tolerance, and independence have seen a slight drop in importance. The research suggests that “the central point of control for some consumers may be moving from internal (i.e., a focus on the self) to external (i.e., a focus on others’ well-being).” Campaigns centered around trust and a sense of security and safety for the consumers are likely to win in this environment.

Find new channels for advertising in the “new normal”

Advertisers looking for more ways to build their share of voice should consider BriefBid: a media discovery platform that connects advertisers with media sellers. Completely free to use for media buyers, Briefbid helps you find more opportunities, takes care of vendor vetting, and automates the RFI / RFP process, so you can simply focus on running your campaign.

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