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The Value of Advertising

(July 29, 2008)  Reports and studies reveal time and time again that consistent, aggressive advertising wins the race. When the economy constricts or even when the news says that the economy may take a negative turn everyone pulls those purse strings tight. It is the knee jerk reaction. Automatic reactions are normal for a moment, but then it is best to think about what is best for the company.

Companies that advertise - WIN. Being the company that is putting their message out there builds brand and the perception that the company is powerful because they have the resources to advertisie when others do not. They are the percieved leaders.

American Business Media reinforces the power of branding, show of stability through advertising:
The Value of Advertising During an Economic Downturn
History has proven companies that maintain or increase their advertising investments in periods of economic downturns increase their sales and share of market, both during and after the downturn.

Here are the facts:
  • Maintaining or increasing advertising budget levels during economic downturns may be necessary in terms of protecting market position vis--vis forward looking competitors. 1
  • If a company fails to maintain its "Share of Mind" during an economic downturn, current and future sales are jeopardized. Maintaining "Share of Mind" costs much less than rebuilding it later on. 2
  • If during an economic downturn you maintain a strong advertising presence while your competitor cuts his budget, you will automatically increase your "Share of Mind." 3
  • Advertising through both boom and down times sustains the necessary brand recognition. 4
  • Maintaining a company's advertising during an economic downturn will give the image of corporate stability within a chaotic business environment, and give the advertiser the chance to dominate the advertising media. 5
  • Economic downturns reward the aggressive advertiser and penalize the timid one. 6
  • During an economic downturn, a strong advertising/marketing effort enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery. 7
  • When times are good, you should advertise; when times are bad, you must advertise. 8
  • Advertising in an economic downturn should be regarded not as a drain on profits, but as a contributor to profits. 9

    • 1 How Advertising in Recession Periods Affect Sales, American Business Media
      2 Ibid
      3 San Diego Executive Magazine
      4 Making A Recession Work For You, American Business Media
      5 Ibid
      6 The Strategic Planning Institute
      7 Coopers & Lybrand
      8 Making A Recession Work For You, American Business Media
      9 Harvard Business Review

Colleen Gildea
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Act Now, Succeed in 2009

(July 24, 2008)  Contracting advertising spending without looking at the long term consequences of success in 2009 is rash behavior. Belief in a recession is not required to see the folly in contracting marketing dollars. A quick look at this classic chart shows the results of advertising during a recession - it is good for business:

McGraw-Hill Recession Chart

The results of a McGraw-Hill research that showed companies advertising during the 1981-82 recession averaged higher sales growth (source). Guide to Top Specialty Boards
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