Recessions create glass-half-full opportunities

I can’t think of a single client who during the last nine months hasn’t asked this question: Should we lower, maintain or increase our marketing budgets during a recession?” Ah, the $10,000 question.

We addressed it before, in a June blog post by Greg Nickerson. But the fact is the question still burns for many marketing executives.

Our counsel on the subject may seem obvious and self-serving; it’s coming from a marketing services agency after all. We’d encourage you to increase your marketing communications activities, such as advertising and public relations, during tough times. The reasoning is that your investment will pay off in increased market share as your competitors instead “go black” during tough times.

But let me assure you, we haven’t grown for the past 35 years by giving our clients bad advice. In fact, we know quite a bit about the roll share-of-voice plays in increased brand awareness, familiarity and differentiation. So yes, we’ll stand behind our recommendation that your business can get a leg up on the competition by not only maintaining marketing spend during a recession, but growing it.

Here’s the proof
You don’t have to take my word for it, however. Recently, The Business Journal Serving Greater Milwaukee ran an article about local insurance company, West Bend Mutual Insurance Co., that decided to stick with a three-year advertising and branding plan that launched just before the recession hit. The results so far?

West Bend officials note increased sales, much of which they attribute to sticking with their strategy.

Interestingly, the same article cited a McGraw-Hill Research study conducted after the last big recession this country faced in the early 80s. The organization found that of 600 companies studied, those that maintained or aggressively increased advertising spending throughout the recession had sales 256 percent higher than ones that cut back.

An astute reader may conclude that maintaining or increasing any marketing activity during any time period — recession or no recession — will have impact. In most cases, he or she would be correct. But that’s missing the point. Recessionary periods create glass-half-full opportunities to increase your business through the multiplier effect. This happens two ways.

First, declining ad budgets have created hungry publishers and broadcasters willing to deal. You can take advantage of this by leveraging your media dollars to buy more with your media budgets in 2009 than you could the last couple of years. That’s one multiplier effect in your favor.

Second, presuming your competition cuts back or “goes dark,” your investment may actually have a 2x or 3x effect for the same dollar than it could during non-recessionary times. In other words, you can dominate the hearts and minds of customers and prospects at the expense of your foes.

West Bend is living proof. And now you can benefit from its lesson.

Comments

[Brendan K]

Another example of the sliver lining a recession creates is that when things tighten -they do so across the board. That means we as communicators of our client's brand have the option to go out and work with production vendors that typically might be out of our budget range. The result is great, unique work at a bargain. Pretty much a win/win for everyone.