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
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:
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?
Ad content that works
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.