Why Advertise During a Recession - In Fact, Why Advertise MORE During a Recession...

A must-read for all serious marketers especially those going through the pain to retain the marketing budget. Hear it from the experts from Knowledge @ Wharton. (The Wharton School is the business school of the University of Pennsylvania).

I have taken the liberty to summarise the article in actionable points as follow, or click for the full article from Knowledge @ Wharton


(A) INTRODUCTION: SO WHY DO THE COUNTER ACTION?

According to Wharton faculty and advertising experts, corporate managers put the long-term future of their companies at risk when they regard advertising budgets as a dispensable luxury especially during critical periods such as this current credit crisis.

(B) – WHY NOT TO CUT ADVERTISING BUDGET?

BECAUSE CUT CUT CUT = CUT THE COMMUNICATIONS

1. Gives the competition a chance..."The first reaction is to cut, cut, cut, and advertising is one of the first things to go," says Wharton marketing professor Peter Fader, adding that as companies slash advertising in a downturn, they leave empty space in consumers' minds for aggressive marketers to make strong inroads.

Research indicates that combative advertising which targets competitors escalates during an economic downturn. "When the marketplace is shrinking, you tend to become a little more competitive in your tone," says Wharton marketing professor John Zhang

2. Disappointments get around too quickly and widely...[David Sable, chief operating officer of Wunderman, part of The WPP Group] warns that in today's networked, digital marketplace, consumer buzz about disappointments with a product can metastasize quickly and widely. "You must give people good things to talk about by continuing to have good products and communication." The biggest lesson is that recessions come and go, but "hopefully your brand is for life. It's forever. So you have to be careful how you react because the downturn is not going to be forever."

BECAUSE IT CHEAP-OUT ON PRODUCTS

3. Dilutes brand equity...[David Sable, chief operating officer of Wunderman, part of The WPP Group] advises advertisers in a downturn to rally to protect and preserve brand equity that has been nurtured for years... "The worst thing you can do is cheap-out on products -- put less coffee in the cappuccino -- as many have in the past."

4. Cost to regain market share later is 4-5 times the costs saved...If companies cut deeply into advertising and communications in a down period, the cost to regain share of voice in the market once the economy turns around may cost four or five times as much as the cuts saved, [David Sable, chief operating officer of Wunderman, part of The WPP Group] adds. "You must really keep a balance in times like this. Don't go dark when customers and consumers need you because they need you as much as you need them."

5. Price-driven consumers still factor in branding...While price is important in a recession, the majority of price-driven consumers still factor in the importance of branding...clear brand association and leadership comes through communication. "If you cut the communication, you have a major problem," says [David Sable, chief operating officer of Wunderman, part of The WPP Group]

(C) + WHY MUST CONTINUE TO ADVERTISE?

BECAUSE IT IS AN UNUSUAL OPPORTUNITY TO

1. Differentiate yourself...As companies slash advertising in a downturn, they leave empty space in consumers' minds for aggressive marketers to make strong inroads. Today's economy "provides an unusual opportunity to differentiate yourself and stand out from the crowd," says Wharton marketing professor Peter Fader, adding that, "but it takes a lot of courage and convincing to get senior management on board with that."

2. Create new attention...Good time to reconfigure the advertising mix between traditional media and digital or other outlets, depending on the product, brand positioning and overall corporate strategy, says Wharton marketing professor John Zhang. "You don't have to put a huge amount of money in the marketplace," he says, adding that lower-cost marketing techniques -- such as banners, street signs or direct mailing -- might merit new attention.

BECAUSE IT IS MORE COST EFFECTIVE

3. Cost of advertising goes down a lot...With demand slack for advertising services, the cost of these services goes down, making advertising expenditures all the more defensible in a bad business climate. "If your company has something to say that is relevant in this environment, it's going to be more efficient to say it now than to say it in better times," says Wharton marketing professor Leonard Lodish.

4. Advertising during recession produces recurring long term benefits...McGraw-Hill Research shows that companies that consistently advertise even during recessions perform better in the long run even after the economy recovered. Specifically, companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise.

(D) *HOW TO DO ADVERTISING BETTER DURING RECESSIONS

ADJUST THE ADVERTISEMENT MESSAGE -Key is to craft messages that reflect the times and describe how their product or service benefits the consumer.

1. Communicate value into marketing campaigns. Many marketers design communications aimed at justifying the price they charge for goods and services, either by emphasizing a low price or touting the benefits the company can provide to buyers. "Advertisers will do both," Wharton marketing professor Patti Williams says. "Some are in a better position to talk about lower costs while others will have to focus on what you get for your money."

a. PRICE Companies might be tempted to emphasize price in a recession, but that only works for companies like Costco and Walmart that are built around a core strategy of providing low prices year after year, says Wharton marketing professor Leonard Lodish. He points to the current Walmart campaign, "Save Money. Live Better," as a successful approach to the recession.

b. PRACTICAL SPENDING Wharton marketing professor Patti Williams cites Gold's Gym -- the Texas-based gym chain -- as an example of a company that has found a way to navigate the economic slump while promoting a product that might seem discretionary or self-indulgent in hard times.

One television spot shows legs working a stair climber as words pop up across the screen changing from "First floor" to "12th floor" to "Kilimanjaro" to "Olympus." Finally the words, "The Corporate Ladder," appear. "This is about being goal-oriented as opposed to a general fitness or vanity play," she says. "It links to the economy because people are less likely to be spending on flashy things and more likely to be thinking practically and pragmatically. Certainly people are going to be spending less in this downturn, but they will spend something."

c. LONG TERM VALUE Especially for luxury products advertisers will also attempt to emphasize long-term value -- such as suggesting that a watch is not just a purchase for today, but for years to come. "You can try to remind people that this is, hopefully, a temporary state of things and we should not be focusing on the immediate future but also longer-term," says Wharton marketing professor Patti Williams

2. Responding to emotions ...Many consumers are weary of negativity generated by the recession and would be receptive to a more upbeat message, says Eileen Campbell, chief executive of the Millward Brown Group advertising firm in New York City. "If you can put a positive spin on how you can genuinely help without invoking doom and gloom, I think that's going to be more compelling."

a. CONTROL "Along with this economic downturn comes a lot of emotional response, such as anxiety. It is characterized by a sense that you lack control, that you don't know what's coming and you are at the whim of circumstance. To the extent that advertisers feel their clients or consumers are experiencing anxiety, ads should try to empower consumers and help them think of ways to be in control in a world where they feel out of control." Wharton marketing professor Patti Williams cites Gold's Gym -- the Texas-based gym chain -- spots address this concern. "'You can't control the economy but you can control how many pushups you do, and take control where you can, and we can help you.' That's a powerful message."

b. COMFORT Wharton marketing professor Patti Williams notes that especially for luxury businesses, they should appeal more to emotion, emphasizing the need for some emotional release or comfort in difficult times.

3. Fine-tune message to be sensitive According to Wharton marketing professor John Zhang, advertisers in all categories must be in tune with consumers in the current climate. For example, he notes that LG Electronics is backing off its "Life's Good" slogan. "That's not the mood people are in. If you do that, it will generate resentment. You need to fine-tune your message to be sensitive."

GET TO THE RIGHT PEOPLE

1. Be more targeted... In challenging times, marketers must work harder to segment consumers with specific messages. "If, in the past, you used mass media, you probably want to be more targeted now to make sure the message gets to the right people,” says Wharton marketing professor John Zhang.

BE AWARE OF ELUSIVE JUSTIFICATION THROUGH MEASURABILITY

1. All forms of media can be successful even in a recession says Wharton marketing professor Leonard Lodish thus it may be foolish to focus only on media whose impact might be easier to quantify and therefore able to withstand the close scrutiny of senior executives demanding justification for any spending.

2. No gold standard in measurability Wharton marketing professor Peter Fader points out that direct marketing and other kinds of interactive communications might be valuable but do not yet deliver easily quantifiable results. "Unfortunately, the industry is still in its early infancy. A lot of people talk about what we are capable of doing in measurability, but no one has established the gold standard yet”

(E) CONCLUSION: SO EVEN IF THERE IS THE NEED TO CUT...

Marketers need to understand the "elasticity" of their brand The "elasticity" of their brand would be a gauge of how much -- or how little -- advertising is necessary to sustain sales. "It's not a science. There's a lot of art there," [David Sable, chief operating officer of Wunderman, part of The WPP Group] acknowledges, "but you must be supporting your product."

Comments

Peter said…
Couldn't agree more. Thinking outside the square when it comes to outdoor and ambient advertising is such a no-brainer way to cut-through the clutter. With the great interactive opportunities now becoming available via Outdoor - like the two examples in my link below - who wouldn't want to stand out from the crowd with creativity like this?

http://blogs.bcm.com.au/blog/2009/03/20/outdoor-goes-interactive/