advertising dissertation - changing trends of advertising

AN EXAMINATION INTO THE CHANGING TRENDS OF ADVERTISING DURING A RECESSION

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ALBION MALAJ


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DECLARATION “I declare that this dissertation is the result of my own efforts. The various sources, to which I am indebted, are clearly indicated in the references section of this research.” The rights of Albion Malaj to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. Copyright © 2011 Albion Malaj __________________________________________ All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission from the author.


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ABSTRACT This research begins by examining the questions, which surround the issues of investing in

advertising during a recession and whether it supports the brand image. These include what trends

are normally viewed before, during, and after a recession, as well as what the most economically

viable option is in terms of increasing, decreasing, or keeping a current advertising budget the same

during an economic downturn.

Sources from academic and non-academic research are considered and illustrate the traditional

orientation of mirroring that occurs between general business trends and advertising trends. It is

shown that advertising movements tend to follow those of general business movements with a

certain pause; as well as being shown that that pause has shortened from several months down to far

less time.

Consideration is given to the differences between traditional advertising venues and newer more

innovative avenues of advertising and the implications for business practice are illustrated. The

research concludes the effects of the brand image and the advertising effects during a recession.


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CONTENTS

Acknowledgement 5 Chapter 1: Introduction Purpose Of Study 6 1.1 Purpose Of Study 6 1.2 The Focus Of The Study: Objectives 7 Chapter 2: Literature Review 8 2.1 Advertising And The Brand Image During A Recession 8 2.2 Advertising During A Recession 10 2.3 Cyclical Behaviour Of National Advertising 14 2.4 The Negatives Side Of Advertising During A Recession 15 2.5 Using The Recession As A Marketing Tool 17 2.6 Key Findings In Recent Large-Scale Studies 18 2.7 Competing Companies Adjust To Recession Advertising 19 Chapter 3: Methodology 21 3.1 Introduction 21 3.2 Ethical Considerations 21 3.3 Resources 22 3.4 Advantages Of Secondary Research 22 3.4.1 Lack Of Access To Primary Data 22 3.4.2 Widespread Of Data 23 3.4.3 Inexpensive Sources Of Data 23 3.4.4 Avoids Data Collection Problems 24 3.4.5 Cover Wider Geographic Range 24 3.4.6 Analyses Social Change Over Time 24 3.4.7 Provides Valuable Background Research/Better Sample Size 24 3.5 Disadvantages Of Secondary Research 25 3.5.1 Quality Of The Research 25 3.5.2 Format Is Not Always Appropriate To The Current Researcher 25 3.5.3 Incomplete Information 26 3.5.4 Research Information Not Always Timely 27 Chapter 4: Data, Analysis, Findings 28 4.1 Introduction 28 4.2 Collected Data And Analyses 29 4.3 Data Collection Methods 35 4.4 Data Analysis 36 Chapter 5: Recommendations 37 5.1 Introduction 37 5.2 Creative New Research That Is Based On Primary Data 37 5.3 Analyse Research Again Post Recession 38 Chapter 6: Conclusion 39 6.1 Final Conclusion 39 Chapter 7: References 41 7.1 References 41


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ACKNOWLEDGEMENTS First and foremost, I would like to thank Michelle Gledhill, whom patiently guided me through the

dissertation process, never accepting anything less than my best efforts.

In addition, I thank all the lecturers whom contributed towards my understanding of advertising and

other subjects that surround advertising.

Many thanks!


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CHAPTER 1: INTRODUCTION PURPOSE OF STUDY

“Advertising should be regarded not as a drain on profits, but as a contributor to profits; not as an

unavoidable expense, but as a means of achieving objectives. Ad budgets should be related to the

company’s goals instead of to last year’s sales or to next year’s promises.”

- Dhalla, Nairman K. “Advertising as an Anti-Recession Tool”. Harvard Business Review. Jan-

Feb 1980

1.1 PURPOSE OF STUDY

When economic recessions loom over an industry, companies and organisations can be unsure of

whether the better way to survive an economic storm involves battening down the hatches and

reducing all optional spending, which is often how an advertising budget is seen, or by taking a far

more pro-active approach and allowing their advertising budgets to stay as they were or even

increase. Once the recession takes hold, companies may find that there is a certain economic

incentive for reducing all out-goings financially. In advertising, it is always important to maintain

brand image especially during an economic recession. Some organisations use the recession as a

tool to improve the brand image or even invent an entire image from scratch.

It can be difficult for any organisation to understand the best and most sensible actions to take

during a downturn in economic movements. While advertising numbers have traditionally shown

that there is a large-scale movement towards reducing advertising money during a recession, it has

also been shown in several studies that companies and organisations which are able to continue to

invest heavily into their advertising will see both short term and long term benefits to their

company’s profit margin and overall market share. Companies that are interested in not just

surviving a economic downturn, but are also looking to use it as a time of growth and strengthening

of their position, may look towards instances where pro-active advertising has shown benefit.

This current research hopes to examine in closer detail the large expanse of information that has

been acquired which looks at what the trends are in terms of advertising budgets before, during, and

after a recession, and then to consider what the implications are for those trends. The purpose will

be to both understand what most companies and organisations do as well as to understand what the

best economic practice is in such economic climates. Information will be considered from

traditional research studies, as well as information from entrepreneurial speculations and media

watchdogs. While the primary purpose will be to understand why investment in advertising has the

impact that it does during economic recessionary periods, this research will also have the secondary

purpose of finding a better answer to the over-arching question, “Does it make sense to invest in

advertising during a period of economic recession?”


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One of the other main points that will be considered in this research is the changing face of

advertising across a wide expanse of companies and organizations and what factors may be

contributing to those changes. With the advent of the Internet and even the new Web 2.0 concept of

social networking and the related possibilities for innovative, directed advertising that is both

specific to the particular consumer being targeted and is also cheaper and more flexible in how it is

set up and run – the entire landscape of advertising is changing. Those changes are both in the types

of advertising methods being used, as well as in the frequency of advertising and saturation points

in the market. Consideration will be given to the factors which are at work on the changing

advertising budgets and to the differences between the United Kingdom market and other similar

markets such as the United States. Where possible, graphs and tables from research studies or

consulting agencies will be used to better focus the attention on individual variables affecting the

advertising movements. The research paper will conclude with several recommendations for future

research including a consideration given to the difficulties facing a substantial work of research into

this area and some concluding thoughts on the ways in which advertising works best (and worst) for

companies and organisations before, during, and after a recession. These conclusions will take into

account the need for a balance between the available budget of a company or organisation, as well

as the long and short term needs of the organisation in terms of what advertising can and cannot do

for the profit margin and market share value. Moreover, the research will conclude whether the

changing trends of advertising have an effect on the brand image during a recession.

1.2 THE FOCUS OF THE STUDY: OBJECTIVES

While advertising remains a dilemma for many marketers during an economic recession, this report

attempts to answer some key questions. During recession periods, marketer may think twice about

advertising and they way it is done because getting it wrong may harm the brand’s image of the

organisation in the long term. Some of the objectives that this report aims to investigate include the

following: • To investigate whether it makes sense to invest in advertising with intention to

improve/maintain brand image and increase market share during an economic recession.

• To identify the changing trends in advertising across various media and how advertising is

tailored to suit economic situations to satisfy consumer needs for safety.

• To examine how the economic recession may be used as a marketing tool for many

organisations to expand into new markets, while advertising with creatively and wisely with

the highest ROI possible.


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CHAPTER 2: LITERATURE REVIEW

2.1 ADVERTISING AND BRAND IMAGE DURING A RECESSION

Since its formal introduction in the 1950s, the notion of brand image has become commonplace in

consumer behaviour research. Numerous studies of brand image have been reported, the phrase has

been widely used in a variety of technical and casual applications, and practitioners and academics

alike have embraced the concept as the embodiment of the abstract reality that people buy products

or brands for something other than their physical attributes and functions.

In reality, brand values are subjective, a point stressed by McDonald (1992) who suggests that “it is

consumers and their habit-forming tendencies who create branding; branding is inseparable from

the ability to choose.” What advertising does is to help control the acquisition of value, and give it

direction. While it is quite common to regard advertising as a major factor in leveraging brand

equity (Achenbaum, 1989), (Lindsay, 1990), it is worth noting that consumers are not passive

recipients of image-laden advertising. Many researchers including Brassington and Pettitt (2003),

Erdogan and Baker (2000) and Redenbach (2000) have found that brands are sensitive to the

communication and anchors which catalyze consumer behaviour.

At all levels of marketing imagery advertising is identified as one of the principal components of

image creation. The question of how advertising affects consumer behaviour represents one of the

most complex and intriguing aspects of understanding in marketing. Brand image is variously

defined as “the set of beliefs held about a particular brand” (Kotler, 1988, p. 197) or “a set of

associations, usually organized in some meaningful way” (Aaker, 1992, pp. 109-10). The “brand” is

often regarded as separate from the functional product, with the brand being grafted on by

advertising, thereby completing the transformation process from functional product to immortal

brand. A well-recognized and accepted brand image is one of the most valuable assets a firm

possesses. Brand managers and manufacturers are concerned with managing brand equity and

capitalizing on the value of a brand image (Aaker, 1991). A strong brand image offers an

organization several important strategic advantages. A brand distinguishes the goods and services of

one seller from those of competitors. A powerful brand identity creates a major competitive

advantage; a well recognized brand encourages repeat purchases.


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Brand name communicates a great deal of information – an image – to the potential customer

because it has become associated with a bundle of information generated by advertising, word-of-

mouth communication, and previous usage of the brand (Stokes, 1985). Brand images are usually

evoked by asking consumers the first words/images that come to their mind when a certain brand is

mentioned (sometimes called "top of mind"). When responses are highly variable, non-forthcoming,

or refer to non-image attributes such as cost, it is an indicator of a weak brand image.

As part of brand image, consumers use brand associations to help process, organize, and retrieve

information in memory and to aid them in making purchase decisions (Aaker, 1991, pp. 109-13).

Associations are a key component of brand image; they differentiate, position and create positive

attitudes and feelings toward the brand (Low and Lamb, 2000). According to Aaker (1991), brand

associations are the category of a brand's assets and liabilities that include anything ``linked'' in

memory to a brand (Aaker, 1991). Keller (1998) defines brand associations as informational nodes

linked to the brand node in memory that contain the meaning of the brand for consumers. Brand

associations are important to marketers and to consumers. Brand image research has long been

recognized as one of the central areas of the marketing research field not only because it serves as a

foundation for tactical marketing-mix issues but also because it plays an integral role in building

long-term brand equity (Keller, 1993). Hsieh and Lindridge, (2005) define brand image as ‘‘a set of

perceptions about a brand as reflected by the brand associations held in consumers’ memory.”

There are various marketing tools for building a brand image; such as sponsorship and celebrity

endorsements – but the most common tool used is advertising. Through advertising, a brand image

is created subliminally whilst using other methods such as sponsorship and celebrity endorsements,

the purpose is direct. Celebrity endorsers have found to produce more positive responses towards

advertising and greater purchase intensions than non-celebrity endorser (Atkin and Block, 1983;

Petty and Caioppo, 1983). Other studies have measured the impact celebrity endorsers have on a

firm’s profitability finding them to be effective. Furthermore McCracken (1989) found that

celebrity endorsers represented an effective way of transferring meanings to brands.

One of the most important sponsorship objectives relates to the projection of brand imagery. With

regards to sponsorship, it may have its origins in the patronage systems of earlier societies, but

commercial sponsorship as it is experienced today is regarded by corporations as being similar to

advertising in that sponsorship investments are made in order to fulfill particular commercial

objectives (Meenaghan & Shipley, 2001).


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2.2 ADVERTISING DURING A RECESSION

While advertising is understood to have some intrinsic level of value, it is not always possible to

understand the specifics of how much value advertising may have for any individual company or

product. There is no clear-cut ratio for financial investment which can clearly give a proportion of

value per pound invested to pound brought back into the company directly through the efforts of the

advertising investment. However, companies are not content to merely throw money at advertising

campaigns in the hopes that enough money will come back in from the advertising to compensate

their investment – rather, now companies are increasingly demanding that there be some type of

proof that their money is working for them.

The American Association of Advertising Agencies’ Value of Advertising Committee established a

study which was run by third-party research groups in order to attempt to discover a clearer

correlation between the money spent on advertising and the money brought in directly through the

work of that advertising campaign (Frankenberger & Graham, 2004). Three individual research

studies were conducted which were each able to demonstrate – in different, yet equally valuable

ways that there is real value in place for each pound invested, even if that value comes from

different avenues. One of the three research studies included in this report, the individual study

conducted by Frankenberger and Graham working under the umbrella of the Marketing Science

Institute found that increasing advertising spending during a recessionary period had both an effect

on increasing value in the company during the recession itself and also increased value “financial

performance for up to three years in the future”.

While marketers have been selling their wares based on the premise that advertising during a

recession adds value to the company by increasing sales and profitability, this has been more than

difficult to prove as it does not directly address the issues of earnings and market value and also

because this value has traditionally been researched only on companies which are providing non-

consumer goods. This clearly has implications for industries that are dealing with consumer goods

and wish to know the effects of advertising on consumers’ behaviours patterns during a

recessionary period.


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In order to evaluate a more comprehensive set of behaviours during a recession, Frankenberger and

Graham established a research study which established an econometric analysis which used a cross-

sectional time series regression. This was conducted on a large and widespread sample of 2,662

firms over 16,147 firm years. The firms included in their study were involved in consumer good

production, industrial products, and also service related industries. The analysis included both

economic-wide and industry-specific effects of the changes during a recessionary period, and

therefore, provided a much wider and all encompassing series of data on the industry behaviours

and value inherent in changes in advertising spending.

Their final results showed clear evidence that an increase in advertising provides a firm asset for the

company by ensuring an increase in profitability for up to three years into the future beyond when

the money was initially spend on the advertising of the industry’s product or service, regardless of

their position as a consumer-based or industrial organisation. Interestingly, it was also found that

the benefit to companies to advertise during a recessionary period actually out-performs the benefit

to a company who advertises during a non-recessionary period. Pound for pound, advertising

during a recession actually provides greater value than advertising during a non-recessionary

period.

There were differences, however, between the different industries in terms of the immediate and

near-future effects of advertising during a recession. For consumer goods and industrial

organisations, there was clear increase in value profit for the year of the recession and the year

following. Service organisations, on the other hand, did not see the same benefit. It was also shown

that where organisations chose to cut back on their advertising spending, that there were only

financial erosion effects for industrial organisations and that only happens during the first year of

recession. For the other organisations, cutting back on advertising spending only had the influence

of not allowing for growth and not providing for value in the following years post-recession.

The conclusions from this study are that it makes good financial sense for an organisation to spend

an increase on advertising budgets during a recessionary period wherever possible. This increase

will translate to a real asset that will appeal to stock market participants and will lead to greater

value growth in the years following the recession.


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This conclusion was echoed by John O’Toole, a president of the American Association of

Advertising Agencies in 1991, who was quoted as saying: “In a recession, the most productive

route for most companies is to increase rather than decrease advertising spending.” The purpose

behind the traditional ideology that businesses should invest more money into advertising during a

recession wherever possible is based upon the premise that an organisation can take advantage of

the softer advertising market to get greater value for their money and increase their ‘face time’ in

front of consumers when their competitors are avoiding spending more money as budgets tighten

down during a recession (O’Toole, 1991). It is expected that taking this rather bullish position

towards advertising during a recession will lessen the overall financial impact of the economic

slowdown and ensure that the company is left in a more secure position once the economic client

begins to recover.

Due to the nature of value for advertising, many of the measures for success of advertising are only

through indirect means. A company may analyse, for example, their market shares or their sales

levels, but not be able to directly analyse the direct profitability and return on investment which is

necessary to truly understand the direct relationship between advertising and profit.

The concept of proactive marketing more directly analyses the ability of an organisation to take

advantage of a recession and not only come out of the economic downturn still running a viable

business, but to actually use it as an opportunity for growth and expansion (Srinivasan, Lilien, &

Rangaswamy, 2002). This concept is best illustrated by the figure below which was created by the

same authors who coined the term ‘proactive marketing’:


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What the image on the previous page outlines is the idea that it is an organisation’s basic

philosophical standing or business ethos which determines whether or not it is able to construct a

means by which it uses recessions as an opportunity to levy an economic hardship into a good

position for company growth and profit. This is done by combining the basic strategic emphasis on

marketing, the business’s entrepreneurial culture, the slack resources contained within the

organisation, and a generalised strategic flexibility into a concept of proactive marketing which

goes into increasing market performance and therefore an increase in the overall business

performance.

It is organisations which are able to see their organisations as having a strong, proactive image

already in the market which are able to parlay that into taking the market initiative in increasing

their advertising budgets at the same time as their competitors may be backing off on their

advertising budgets in recognition of the apparent disadvantage of having less financial resources

immediately to hand when the economic environment is struggling on a global scale. It is necessary

for the executives of such organisations to have an overall appreciation of and understanding of

how well-times marketing investments can revolutionise their company’s position in the long term.

By taking advantage of this ability to invest in the long term marketing and advertising strategy, an

organisation is better able to take advantage of the increased growth in profits and value for the

three years post-recession found by other studies.

It is feasible that businesses and organisations which are well-placed to take advantage of a softer

advertising market and slower competitor reaction to a recessionary period are such quite simply

because their company attitude has placed them there: “In addition, there may be some external

factors that influence the proactive marketing in firms that strategically emphasize marketing. Such

firms are likely to have strong relationships with marketing and advertising services suppliers (e.g.,

advertising agencies, media buyers) because they have historically been large buyers of these

services. During a recession, marketing services suppliers, who are usually severely affected by the

demand recession and subsequent cutback in overall marketing investments, offer more cost-

effective marketing investments in terms of both total outlays (e.g., discounts) permitting more cost-

effective increases in share-of-voice. Even though cost-effective investments are available to all

firms, firms with a strategic emphasis in marketing are more likely to capitalize on these

opportunities.”


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“The greater a firm’s strategic emphasis on marketing, the greater its proactive marketing during a

recession. (Srinivasan, Lilien, & Rangaswamy, 2002)”

While some companies may focus their attentions on providing short term promotions when

attempting to drive greater business their way in order to achieve greater profit and customer

numbers during a recession, findings have shown that this is only a short term option and one which

does not always show a real benefit, as any profits that are brought in are done so at the cost of

taking full retail value for the promotional items. Therefore, it has been shown that there is greater

profitability in putting greater emphasis on advertising during a recession than on promotions, as

advertising has both the short term benefit of increasing sales and the long term benefit of

increasing brand name recognition in the future years of the business (Kim, 1992).

Even when new data sources are used and analysed using advanced statistical platforms, it remains

clear that there is a real and positive relationship between the size of the budget for market

advertising during a recession and both the short term and the long term benefits to the organisation

in terms of both the profits brought in and the name-brand recognition and marketing for the future

(Kamber, 2002).

2.3 CYCLICAL BEHAVIOUR OF NATIONAL ADVERTISING

Traditionally speaking, the data on national advertising expenditures does not suggest much cyclical

behaviour (Blank, 1962). What has been shown, however, is that advertising behaviour does

change in response to swings and changes in the general business environment. From the post-war

era and on, there has been a close link between the general business changes and those of the

advertising investments. While earlier data has shown that advertising peaks tended to follow

business peaks by several months, as time has gone by, more and more often these lags are shown

to be shortening substantially. Generally speaking, the world of advertising is a much faster paced

world than it had been previously and companies and organisations are able to respond to changes

in the business world much more rapidly in terms of their advertising behaviours.

If compared to the gross national product, it can be seen that advertising changes have expanded at

a greater rate than the gross national product. This has implications for the general attitude towards

the ability of advertising to help an organisation to grow or increase their profit margins and value.

This mirroring of gross national product expansion is in turn seen in reverse when the gross national

product is in decline.


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As a recession bears down on an economic environment, the advertising expenditure tends to follow

a similar downward turn, but does so at a magnified rate. Should an economy recede by 1%, for

example, then the overall advertising expenditure will tend to deflate by 5% (Picard, 2001).

Picard’s study which examined the difference in these changes across nine developed nations, found

that these changes did not hold steady across the differing nations, nor across all types of

advertising. Instead, he found that there were fluctuations in changes according to the general types

of economies, which industries were most affected by the recession, the overall policies of the

economic systems and other factors. Most tellingly, however, were the changes seen across the

differing types of advertising.

Print media, including advertisements in magazines and newspapers was more often than not

significantly more affected than those of advertisements in broadcast venues. In most cases, there

was a difference of more than four times the deflation between print and broadcast advertising.

This can be seen in relation to the changing gap between changes in the length of time it takes

advertising expenditures to mirror changes in the business environment. Where the response times

are faster and more immediate, the effects are seen as less than the effects which impact the slower

media types. Broadcast advertising is a much more immediate way of getting customers interested

and is often seen as a faster method of changing the value of a business. With the advent of the

Internet and cheaper ‘viral’ advertising, there has been a general decline in the budgets allocated to

the ‘older’ forms of advertising, such as traditional broadcast advertising and print medias. There

has been a generalised decline of expected broadcast advertising expenditures by 30% and an

expected decline of 44% in print medias (Held, 2008).

2.4 THE NEGATIVE SIDE OF ADVERTISING DURING A RECESSION

While the hard data may point to the obvious point that investing in advertising, especially, not even

‘as well’, during a recession adds short and long term value to a company’s stock market assets and

profit margin, it is still a hard truth that constant negativity in the media during a recession can lead

to a reduction in both consumer confidence and in business confidence. It can be exceedingly

difficult for a company to trust that the global economic recession will ease before the company has

gone through undue hardship and it can be equally hard to trust that a company can weather the

down turn in economic forecast.


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The behaviours of an organisation as regards their advertising budget during a recession can speak

volumes as to their overall confidence in their product or service (Farrell, 2009). It is possible to see

through declining market advertising revenues that many companies are reducing their advertising

budgets even in light of the traditional understanding that recessions are a good time to push

through a soft advertising market and achieve greater growth for the company in the long term. This

pull back can put both sales and industry jobs at risk, which then goes on to underscore the

confidence of consumers and workers and continue the recessionary trend.

Studies of previous recessions suggest that continued advertising spending increased sales, market

share and brand reputation in the long term. (Farrell, 2009)”

It is unfortunate for organisations to ignore traditional understanding in this area, especially as an

increase in social networking and more advanced technologies means that it is getting increasingly

easier to view clearly the link between various marketing campaigns and their company’s successes.

By achieving a more creative and reflective attitude towards marketing their product or service to

the consumer (or do the industry, in terms of industrial organisations), it is far more possible to turn

a negative into a positive than it is to sustain a negative as merely a neutral.

Attitudes, however, are constantly in flux and the increased interconnectedness may have a negative

impact as well as the potential positivity of being able to better understand the implications of the

market movements: “Eventually everybody hurts in the interconnected age. Social responsibility

and sustainability are not fashion items, practitioners must reflect on whose interests are being

served. Moral muteness and myopia are no longer excusable; clients and agents need to walk the

talk. Advertising has an instrumental role to play but must make nobler moves not try to get ‘more

bangs for their buck’ using cheap, deceptive, misleading or offensive tactics. (Farrell, 2009)”

It is increasingly necessary for companies to adapt to the changing feeling of the times and address

the public’s morale, as well as staying well-informed of changing fashions and attitudes. Should a

company invest heavily in advertising which is against the feelings of the public, then it is

completely possible that they will find that their advertising monies have been wasted in terms of

showing strong returns in profit and long term positive market branding. Where a company takes a

proactive approach towards advertising with a weaker financial foundation, it is more than possible

that they will find that their risk has been without true reward. During a recessionary economic

climate, that sort of bad gamble can be enough to completely demolish a company’s ability to

rebound through an economic downturn. With this in mind, it is not difficult to understand why

some companies are not able to fully embrace the traditional philosophy of increasing advertising

budgets during a recessionary period.


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Even as the current recession was only looming in 2007, and not yet there, the advertising world

was already taking a hit with sales of advertisements were bottoming out at a record pace and it was

clear that the majority of companies were taking a safe, “wait and see” attitude towards spending

more money on advertising at a time when consumers were getting increasingly worried about their

ability to earn enough money to sustain their usual market behaviours (Sibley, 2010). Once the

recession took firm hold and it was impossible to determine just how long the economic downturn

would last, more and more businesses chose to step out of the advertising world and try to sustain

their own bottom line by saving money wherever possible. As advertising does not have a clear

investment-to-profit model, it can often seem like one of the most sensible places to save money.

2.5 USING THE RECESSION AS A MARKETING TOOL

While some companies see an economic recession as a time to hunker down financially and try to

avoid spending more than in previous quarters, others use it as a tool to advance their market shares

through inspiring consumers with their ability to adjust to a recession and address their consumers’

changing needs. Some companies do this purely through establishing a service which helps

consumers (or appear to help consumers, as the case may be) to gain money through products or

services they previously thought were worthless or through offering a means to save or borrow

money through recessions.

Other companies change their slogans and image as a means to address the changing attitude of a

population in the midst of an economic down turn. By creating an image of a company which is

more homespun, they can give the impression of being a safer, more sensible manner in which to

spend money. For example, companies which produce products which are meant to help consumers

to save money, selling garden products so that consumers can grow their own food and thereby

‘save’ money they would otherwise spend at the grocery store or companies which sell sewing

machines or knitting materials appealing to consumers’ desire to make or mend their own clothes

and thereby save money that way.

Some companies use the recession to change their slogans or company look, giving the impression

of cost-savings and real frugality for the consumer. McDonald’s stops emphasising the items which

had been part of their ‘gourmet’ range and begin focusing on their value meal deals and their pound

menu.


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2.6 KEY FINDINGS IN RECENT LARGE-SCALE STUDIES

• The companies who increased their spend in a recession were the only ones whose profits rose

substantially when the economy recovered (Dobbs, Karakolev, & Malige, 2010).

• The advantages of maintaining or increasing marketing effort are greater than the short-term

benefits of reducing spend (Barwise, 2010).

• The companies who had cut their marketing budgets saw ROCE (return on capital employed)

decline by 0.8% after the recession (Dobbs, Karakolev, & Malige, 2010).

• Those who increased their marketing activity saw an increase of 4.3% (Dobbs, Karakolev, &

Malige, 2010).

• The sales of companies who had kept advertising during the 81-82 recession had risen 256%

over those who had not (Dobbs, Karakolev, & Malige, 2010).

When considering more specifically the brand of products being sold, there are several key findings

which consider what effect an established brand has during a recession and how competition

continues to work (or not work) during times of economic down-turn. The following findings

indicate how and when an increase to or sustained attention to a company or organisation’s

advertising budget will help to hold the company in good stead (Price Waterhouse Coopers, 2009):

• Brand leaders remain brand leaders - they do relatively well providing they maintain their

advertising expenditure relative to competitors. This is true from shampoos to prestige cars.

• Basic "value" brands have also done relatively well - from juices to cars.

• More expensive brands that are not brand leaders do worst.

• But it's not all about price - there is evidence that increased interest in "value" may make "25%

extra" as attractive as "25% off".

• There is also evidence that risk avoidance has become more important. In cars and car

insurance there is increased desire for "protection" - warranties, cover etc. - reflecting an

increased need for consumers to limit downside risks.


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2.7 COMPETING COMPANIES ADJUST TO RECESSION ADVERTISING:

STARBUCKS VS. MCDONALD’S

Companies who are in a position to increase their advertising during a recession or who are wise

enough to understand why it makes sense even if they are not necessarily in a good financial

position to do so, will often find themselves having to advertise creatively so as to address differing

consumer attitudes. Companies who have cheaper or apparently cheaper products can focus on the

“value for money” concept of their sales prices. Companies, however, who are perceived as being

more costly, have to adjust how they showcase their products so as to appeal to their consumers’

ethics, logic, or emotions in order to convince them to spend more money. For example, the sale of

coffee. McDonalds is a company which is seen as being “cheap” in terms of the actual financial cost

of their products; this puts them in a good position to appeal to consumers who will be looking for a

bargain or to get a meal for cheap. If a customer wants to have a cup of coffee, then McDonalds has

been quick to illustrate their value-for-money by comparing themselves to other coffee

establishments which charge a larger amount of money for a cup of coffee. The following image is

of an advertisement by McDonalds during the recession:

This is a clever advertising slant which illustrates why a consumer may wish to go to McDonalds

without even needing to state outright what price McDonalds charges for their cups of coffee

(currently a customer will pay around £1.09 depending on the neighbourhood) – they simply trust

that their brand name and reputation is well-enough established that a customer will immediately

recognise that their coffee will be far cheaper than what they will pay at other specialist coffee

shops.


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Compare that, then, to an advertisement from Starbucks Coffee chain which had the following

advertisement running at about the same time:

Starbucks, in comparison to McDonalds, is simply

not considered to be a company that focuses on

cheaper products. While arguably a more

reasonably priced coffee than may be gotten

elsewhere, it remains an organisation that prides

itself on having something to sell other than

lowest possible price. When McDonalds

comments that it would be dumb to pay “four

bucks” for a cup of coffee, it is Starbucks and

similar chains that they are referring to. Starbucks

cannot advertise in such a way as to minimise the

difference in cost due to the long-standing

reputations of each organisation, Starbucks would

struggle to undo the concept that follows them of

being a higher priced cup of coffee.

What they do instead, here, is focus on the reasons

why a consumer may choose to pay more for a cup of coffee even when a cheaper option is

available. Starbucks has prided itself on becoming an organisation which engages in Fair Trade

practices wherever possible in a bid to support impoverished and in-crisis societies and countries.

Therefore, they are required to appeal to something other than a consumer’s desire for cheap, they

have to appeal to the other side of ‘good value for money’ which states that sometimes there are

other costs to take into account. Here, they are able to subtly remind the consumer that there are

people in the world who are worse off than this society is, even with the current recession, and who

therefore require the support of people who can afford to spend a few extra pounds on a cup of

coffee.

While these are two different ways to use the recession to advertise their products, both

organisations are focused on using the economic downturn to enable their products and services to

stand out for a particular reason. Where possible, organisations can focus on their ability to provide

cheaper products and services, but established organisations that charge more for their products are

not doomed to failure during an economic down turn. Instead, they merely have to achieve an

advertising campaign which focuses on areas which are also important to consumers.


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CHAPTER 3: METHODOLOGY

3.1 INTRODUCTION

This research focuses on secondary research only and was designed as an archival study which did

not include primary data collection in any fashion. This research was conducted as a desk study and

will provide a deeper understanding of the data through an archival approach, rather than by

attempting new empirical research. A multitude of studies (the included reference list is the main

source of literature, but several more studies were used in order to establish background research

and to explain some of the factors which led to the data that was collected; these are included in the

appendix as well) was inspected and analysed for similar data which may be hidden behind

different terminology or differing data collection practices.

A graphical interface was used to tabulate the information into categories that were widened as

necessary to allow for superficial differences. The main method that has been used in this research

is an archival process of finding consistencies and inconsistencies in how the data was presented in

each research and creating a new formulation that will allow for all of the research to be seen in

similar tabulations.

This method was chosen carefully to deal with the overall aim of finding common threads (as well

as identifying any important differences) between the existing research; it is believed that it is of

greater use in this field to combine previous studies rather than adding in new data through further

empirical studies.

3.2 ETHICAL CONSIDERATIONS

This study is essentially evaluative research and therefore does not have the complex ethical

considerations involved with doing new empirical research, especially on a difficult set of data

involving confidential business data which requires a myriad of informed consent and assents

throughout.

While this study did not undertake to deal directly with the companies, and therefore avoided some

of the ethical considerations involved with doing such studies that does not mean that ethics are not

important to this study. Confidentiality and anonymity are just as important in this study as in

others, and therefore every consideration was taken to ensure that no sensitive information was

carelessly shared. All sensitive company information was anonymised if they had not already been

in previous studies. No confidential information will be shared without gaining prior consent from

the particular participating companies.


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3.3 RESOURCES

As this study was particularly archival research-oriented, the majority of the project time allocated

was necessarily dedicated to studying the field of previous research – even for studies that were not

included in the full data analysis, it was necessary to evaluate them closely to understand the

foundations of the research in the field (please see indicative references for the full list of

considered studies). The researcher required access to online and print copies of the studies, as well

as the resources to find raw data where it was not included in the published forms of the research.

The equipment needed was of standard academic use: copy machine, computer, raw data from

previous studies, library access, and paper. No further special materials were required.

3.4 ADVANTAGES OF SECONDARY RESEARCH

Secondary research is one of the most common methods for collecting data, especially in areas

where it is difficult to collect original data. While it is not always the most appropriate avenue for

the collection of data, it may be:

• Lack of access to primary data

• Widespread range of data

• Inexpensive sources of data

• Avoids data collection problems that confound

• Cover wider geographic range

• Analyses social change over time

• Provides valuable background research/better sample size

3.4.1 LACK OF ACCESS TO PRIMARY DATA

There are many situations where there is difficulty in acquiring primary data for the use in non-

secondary research analysis. In this current research dissertation, for example, it would be

incredibly useful to be able to cull together specific information on budgets from several large and

smaller scale business, particularly the aspects of their business budgets which relate to their

advertising percentage. In this manner, it would be possible to clearly see how much of a

company’s budget is normally associated with advertising and how that changes or does not change

during the times of an economic recession. This would be particularly useful over the course of a

longer time period, so that it could be seen on a macro level across many different companies.

Unfortunately, of course, it is not possible to gain access to this type of information.


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Many companies rightfully protect such information to prevent their competitors from gaining the

advantage of knowing how they are allocating their funds and how those allocations change during

the changing economic phases. While it could theoretically be done by acquiring budget

information from companies and anonymizing it prior to analysis and publication, it would be

nearly impossible to do so on a wide scale. While it may be possible to convince one or two

companies to provide some information under the promise of confidentiality, it is unlikely that

enough companies could be persuaded to take part to allow for a proper sample size.

Secondary data collection and analysis, then, allows for research to be conducted on areas that are

otherwise untouchable by primary research designs. This current research, for example, could not

have been done in any fashion through the collection of primary data sources. It would not have

been a workable research design to suggest the need for primary data in advertising budgets during

recession and non-recession periods.

3.4.2 WIDESPREAD RANGE OF DATA

While a researcher tends to have a research question in mind when he or she begins working on

their data collection and analysis, it is always changeable according to the information that is found.

Depending on the range of data available, whole new avenues of research can be opened up or re-

directed from other areas in ways which cannot be planned for in advance. This is of great value to

the world of research, since it allows for creativity and for the information that already exists to lead

the creation of theories and analysis.

3.4.3 INEXPENSIVE SOURCES OF DATA

One of the chief concerns with producing a masters or even doctoral level dissertation work is that

there are very few financial assets available for data collection. Secondary data collection is an

inexpensive; often free way of acquiring information. This allows students and non-commercial

entities to do independent research which may well lead to innovations in theory and understanding

that would not otherwise be possible with their inability to fund expensive forays into primary

research sources. Especially where companies may require certain levels of payment to gain access

to confidential or heavily restricted information, primary data collection may be exorbitant in terms

of the cost to the researcher.

For research studies such as the current study, it would not be possible to find funding which would

allow for the accessing primary sources of data for enough companies to allow for the proper

sample size. Therefore, it is necessary to use the available secondary data in order to create the

research background for the theories presented in this research paper.


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3.4.4 AVOIDS DATA COLLECTION PROBLEMS

Where a single researcher is responsible for the collection of the data use in a single research paper,

there is always the possibility that there will be a problem in collection, either based upon the

research design itself or in how the researcher goes about collecting the data. A single confounding

variable in the data collection may be enough to make the entire data set unusable or set the

research schedule back in a drastic fashion. By using data that has been collected by many different

sources, it is possible to mitigate the effects of any single researcher’s confounding data collection

methods or lacking research design.

3.4.5 COVER WIDER GEOGRAPHIC RANGE

One of the primary reasons to focus on secondary data collection when wanting to deal with

research questions that deal with market behaviours over a wide economic timeframe is that it

allows for information to be used which covers both a wide geographic area and a wide time scale.

When collecting primary data, restrictions on resources will usually mean that the data collection

must be limited to a far smaller area and time frame. While this may be worthwhile if the research

question deals primarily with a small scale effect on an individual business, it is not as useful when

trying to assess the market effects of a recession across a wider expanse of companies and

advertising behaviours.

3.4.6 ANALYSES SOCIAL CHANGE OVER TIME

The benefits of secondary data collection on a research question such as the present study are

especially evident when dealing with the market changes in attitude across longer periods of

economic behaviour. As recessions begin, progress through, and end, many months and even years

pass. There are very few research projects which allow for the researcher to dedicate that level of

commitment of time. While a proper longitudinal study may have value when accessing the

behaviours of an individual company over time, it is simply not possible to use primary data when

looking at behaviours which may be changing across years or even decades.

3.4.7 PROVIDES VALUABLE BACKGROUND RESEARCH/BETTER SAMPLE SIZE

Secondary research is incredibly valuable in terms of its ability to lend a large body of background

research to the overall research question. Should a research only have the limited time or resources

to focus on a smaller entity of data, he or she may miss out on the wider picture information that is

available when examining an entire scope of data available through secondary data. This in turn

ensures that there is a larger sample size available for scrutiny in the research project itself.


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3.5 DISADVANTAGES OF SECONDARY RESEARCH

While secondary research has many benefits and was chosen as the most proper avenue of research

for this particular research on the effects of a recession on advertising behaviours of companies – it

has several drawbacks which indicate that there should be some caution applied when assessing the

results.

3.5.1 QUALITY OF THE RESEARCH

It is one of the strengths of secondary data collection that the data collection is spread across more

than one researcher, so any confounding that may arise from one researchers is mitigated by the

breadth of other researchers is also, unfortunately, one of the weaknesses of the secondary research

methods. Where one researcher can be assessed based on the quality of their methods and the

elegance of his or her research design, when the data collection comes from a series of researchers,

it is nearly impossible to assess the different research designs and methods which have been at work

for creating the pool of data.

Research dissertations can, of course, outline the methods used by the researchers which are

contained within their pool of data, but it is very rare that a research paper is capable of the length

and breadth necessary to go into the proper detail and length required to explore each and every

weakness of the various researchers involved in the background research. This means that there

must necessarily be some details lost and while those details will surely usually involve bits of

information that are not necessary to understanding how the data came to be, it is equally necessary

that there will be times when the lack of detail is hiding a lack of academic rigour in some

instances. Every precaution was taken in the current research to ensure that the best possible

research sources were used to enable the data pool to be created from the best data collections, but it

should always be understood that when using secondary data sources, it is impossible to account for

every fluctuation in data methodology and collection.

3.5.2 FORMAT IS NOT ALWAYS APPROPRIATE TO THE CURRENT RESEARCHER

One of the greatest difficulties with using secondary research is that the research designs of the

background researchers will have been focused on other research questions and designed to provide

data in a format conducive to their own theories. This means that the research often comes in

formats that are not equivalent to the work that is being done in the current field of work.


26

While this difference is often one of simple formatting, which may involve changing the

terminology used to more appropriate terminology or re-designing the spread of data to one which

makes more sense for the questions at work in the current dissertation, this sometimes means that

the data is incomplete for the purposes of the study or not useable at all.

If a study has focused on one necessary variable for the current study, but also included several

other variables that were not the focus of the present study, then it is possible that that collection of

data may be presented in such a way as to prevent pulling out the appropriate data without

corrupting it with the other variables. This may also lead to some variables being over-emphasised

in some studies, while under-emphasised in others. This imbalance of data may very well lead to an

inability to make real suppositions based on the information at hand.

In the current study, for instance, consider that the bulk of background research has been focused on

the work and mood of advertisers and companies during non-recession periods. This makes sense

since there are more non-recession periods in the economic period and therefore, provides the most

data to be collected. When putting this against the slimmer amount of data collected on how

advertisers adapt to recession periods, however, there is the issue that there is more data on one side

of the equation than the other, making it difficult to create real theories based on fairly balanced

data.

3.5.3 INCOMPLETE INFORMATION

It is not always possible to collect the entire data collection needed for a study based upon purely

secondary research methods. This is due to the nature of research while seeking to do independent,

necessary research, it necessarily follows that there is not going to be a large pool of researchers

who have done the same work before. This research work, therefore, is built upon a patchwork

collection of data culled from other research studies which have had different focuses.

In most instances, it is possible to make the information fit by considering where the previous

research designs were aiming to go, it is possible to pull out the data and use it for the current

purposes. Unfortunately, however, it is impossible to always collect the full amount of data needed,

since previous researchers have not always been focused on the same needs and requirements for

their own research. This is also related to the earlier discussion point that for fields where primary

data collection is not really possible, for instance, in the current research project wherein companies

are unforthcoming with their advertising budget and decision-making processes; the information

will simply not exist in a manner which can be collected and used for research analysis.


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While it is not possible to simply convert to doing specifically primary research methods, it is still

necessary to consider that this is a shortcoming of using only secondary sources for data collection.

There are times in the research when it is not possible to answer every question which has been

illustrated as being necessary to address. This research has done its best to consider the implications

of the missing data wherever possible so that the questions themselves may lead to consideration of

possible theories of explanation.

3.5.4 RESEARCH INFORMATION NOT ALWAYS TIMELY

One of the biggest issues with the appropriateness of the data being used in the current research is

the timeframes being considered. As periods of recession and non-recession may encompass huge

swaths of time, from months to years, to decades, it is not always possible to find the necessary

secondary data which will cover those entire time frames. For instance, a research study may focus

on the variables necessary for this research study, but only focus on a window of time covering a

few months or a year, if this current research wishes to consider the implications of the variables

across the entire time period, then, it will find that the secondary data pool does not have the

capabilities of giving all of the necessary information.

There is also the shortcoming in secondary research collection that research is not always published

in a timely fashion for the current research to take advantage. Some studies exist which are in

progress and will eventually offer up the necessary data that will lead to greater understanding of

the questions under consideration in this current study, but not in the necessary time frame for the

completion of this dissertation. This can lead to a gap in the information which necessarily makes

for a weaker ability to draw theories and inferences from the information available.


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CHAPTER 4: DATA, ANALYSES, FINDINGS

4.1 INTRODUCTION

All of the research studies examined in the literature review were examined in accordance with the

methodology to determine the rate of recessionary advertising budgets in comparison with non-

recessionary rates of advertising budgets. While the data was necessarily limited by the confidential

nature of the budgetary information, it was possible to determine a framework of understanding

from the information provided. Each study was considered in accordance with the need for clarity

of financial data, as well as being analysed against any existing information provided for previous

and latter advertising changes.

Consideration was given to comparisons between consumer recessionary behaviours in accordance

with the advertising budgets by examining the self-described behaviours of consumers in relation to

areas of advertising possibilities. It was considered that there would be an understanding drop in

monies spent on advertising if there was a subsequent drop in numbers of people who were

partaking of advertising venues – if people were reducing their time spent on the Internet, for

example, due to the recession causing a drop in the number of people who were subscribing to the

Internet providers, then it would follow that a company would consider lowering their Internet

advertising budget.


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4.2 COLLECTED DATA AND ANALYSES

This shows that there was a small drop in the number of hours spent using television, radio, and

fixed telephone services between the years of 2002 and 2007. It should be noted, however, that

these drop rates are not statistically significant. The rates of drop in minutes per day by consumer

for those services were not less than chance and therefore have less impact on the actual rate drop

than would be expected. There was a rise, on the other hand, between the numbers of minutes spent

per day on the Internet and on mobile telephony. The rate of increase in Internet usage was strongly

statistically significant and the increase in mobile telephony was slightly less strongly, yet was still

positively significant.

The increase in usage – double the numbers of usage in 2002 to 2007 for mobile telephony and four

times increase in the use of the Internet gives some credence to the movement towards an increase

in the advertising budget being spent on non-conventional advertising venues such as the internet

and cellular texting messages. This should be considered in comparison to the rates of advertising

being spent on the television and radio advertisements. The rates at which consumers are using a

product is always an important comparison when considering the rates at which advertising budgets

should adapt, but is especially important when considering where limited recessionary monies

should be spent.


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The following figure shows the rate of advertising spending for the year 2009 in the United

Kingdom. Consideration is given to the rates of advertising in the Internet, Press-Display, Press-

Classified, Direct Mail, Television, Outdoor (including billboards and signs), Cinema, and Radio.

This figure shows that in the year 2009 there has been a change in which advertising areas gets the

most money. Radio has dropped down to a nearly insignificant 3.3%, while the traditional spend of

television has remained strong at 21.9%. This is all going on behind the market leader of the

Internet, however, which has the majority share at 23.5%. This is likely to be the first time that the

majority of advertising budget has been spent on the Internet, as compared to any of the other

traditional or non-traditional market areas. This is a clear shift in how companies and organisations

consider where their money is best spent, especially in consideration of the economic environment

in the year 2009. During this year, the economy was still classified as being in recession and there

were very differing testimonies being given as to when it could be expected to be coming back out

of the recession. For companies to put their limited and potentially risky advertising budget into

advertising on the Internet, it indicates that there is a real shift in how companies and organisations

consider this previously un-traditional mode of advertising.

This shift is encapsulated in the following graph that shows advertising budgets in comparison

between 2004 and 2010 in relation to the amount of the total advertising spend which is portioned

out to advertisements purchased on the Internet:


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It is in line with the previous data which examined the number of minutes in any given day that a

consumer would be using the Internet, however, and show that the market is considering the age

range and monetary value of consumers who use the Internet for a large portion of the day. What is

perhaps most interesting is considering that there is a difference in how far a single pound will take

you when considering where to place the money in advertising.

While the scope of this paper does not allow for an in-depth consideration of how advertising is

perceived by consumers, it is interesting to note in brief the difference in how consumers feel about

a inundation of advertising in any one medium, especially in consideration of the previous graphs

which showed that there was a clear increase in advertising in the Internet advertisements and a

continued high rate of advertisement budgets in television advertisements.

The next graph shows the rate at which people feel they see/hear/are exposed to advertising in

different venues, which also clarifies the point at which consumers feel that the rate of advertising

has tripped over the line between “aware of advertising” and into the area of “too much

advertising”:


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This graph that while the general attitude towards advertisement is that there is only slightly “too

much” – with the numbers tipping just gently over at 72% where the rate of “too much” is seen at

70% - those numbers are much higher for Internet and for television in particular. While the Internet

advertising has only slightly come over the line of “too much”, there is a very clear and majority

attitude that there is far too much advertising in the area of television for the advertising consumer

to find appropriate or enjoyable. With an 83% awareness of television advertisements and a full

13% over the threshold for “too much”, it may well be time to consider the arena of television as

being over-saturated in advertising. If taken in consideration of the current value of the pound in

relation to “air time” between television and non-traditional venues of advertising, there are clear

areas where advertising budgets can be stretched in a more useful manner.

The following chart focuses on advertising in the United States rather than the United Kingdom. It

shows this same re-focusing of where the money for advertising is being spent. With a renewed

focus on non-traditional venues for advertising, it is possible to consider the changing attitudes

towards adapting advertising to suit the consumer’s needs and wants, as well as adjusting for the

changing economic climate.


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This analysis was done in the year 2008, which was a year when the United States was very clearly

still in an economic recession, allowing for comparisons to be made between behaviours and

attitudes between the two nations during the current recessionary period. Again, there is a clear

increase in advertising being spent on the Internet, including social network marketing (the highest

rate of increase with a marked increase of 48%). In comparison, the number of companies or

organisations which were increasing their television or radio ads was a rather dismal 6%, with a

incredibly high 83% of companies reducing their advertising budget in these areas.

Interestingly, the next figure from FTI Consulting uses historical advertising data to postulate a

theory on future advertising and imagines that the rate of radio and television advertising revenue

will hold relatively steady over the coming years, with the rate of advertising spent on internet

gaining some small increases in advertising budgets over the years.


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This shows a decrease of advertising spend for the year 2010 in line with a reduction in advertising

budgets during the economic recessionary period – with that lowered rate increasing each year until

it resolves itself to 2007 rates by the year 2014. The reduction in newspaper advertising spend is

not expected to recover, with broadcast television rates holding relatively steady. The Internet

advertising spends will nearly double from 2010 to 2014, as projected.

This idea is further encapsulated in the following graph from Giganomics Consulting Inc., which

echoes this sentiment:


35

On the graph on the previous page, again we see the large jump in Internet advertising from $97

million in 2001 to a incredibly dramatic increase to $1,241 million in 2007. While television

advertising also increased (in line with inflation and other factors affected increases in advertising

spend), it was not nearly so substantial, going from $2,553 million to $3,299 million in 2007. It

should be understood that some of the difference in value – the Television spend at its lowest is still

double that of the Internet spend at its highest – should be understood to be related to the value of

each dollar/pound spent in either advertising venue. Simply put, a single pound spent on television

advertising will get a company or organisation far less than the same pound put into advertising on

the Internet. While the adjusted value may be very different indeed, after all, a spot on cable or

broadcast television will reach far more customers in any single moment than an advertisement put

on the Internet, it still stands to reason that to get the same level of saturation between television

and the Internet, it requires less initial outlay of monies to buy time on the Internet than it does to

buy time on the television.

4.3 DATA COLLECTION METHODS

In assessing data that relates to overall advertising movements during an economic recession,

consideration was given to all consultancies which were able to provide graphs or data which was

validated by at least one other respected source. No credence was given to any single individual’s

speculation or conjecture, but the resources that they used to create their own theories may have

been mined for collecting any further information as regards the projected future advertising

movements in relation to differing markets and for amounts of spend considered for each area of

advertising. While the preponderance of data was taken from organisations that were considering

the advertising trends in the United Kingdom, some consideration was given to findings of

companies and organisations operating in the United States or other countries where it was found

that there was likely to be some parallel or overlap between the findings. As the two nations were

very similarly placed for their economic recession and recovery, it was considered that the two

nations could very well inform the other in terms of the movements and decisions taken by their

companies and organisations, as well as to the behaviours and buying and shopping trends of their

consumers.


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4.4 DATA ANALYSIS

The data was considered for the numerical reoccurrence of terms used between studies, as well as

looking for instances where findings were not replicated or were found to be contradictory to what

was found by other researchers. Again, each finding was showcased individually before comparing

it to the group, so that any outlying data findings can be flagged up prior to inclusion.

Trends in advertising movements and in the socio-economic factors affecting buyer confidence and

behaviours was analysed using statistical analysis when determining if there was a higher than

chance, statistically significance change in the numbers.

No complex analysis was given to the numbers, in consideration for the theoretical nature of this

dissertation, but every care was taken to ensure that the numbers were clearly and truthfully

represented. Any numbers which were not echoed in other sources were noted in the body of the

text to ensure that it was clear that, while all sources were checked for reputability and for clear and

proper methods in their own data collection and analysis, no more credence was given to the weight

of their argument than was right and proper considering the un-validated nature of their claims.


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CHAPTER 5: RECOMMENDATIONS

5.1 INTRODUCTION

No matter how advertising trends are approached, it is always going to be an incredibly large, dense

area of study. There are an incredible number of factors in play with determining how companies

and organisations choose to spend their advertising money, how that money turns into value for the

companies or organisations, socio-economic trends within the behaviours of consumers, and how

“value” is determined for any single advertising choice. It is nearly impossible to draw out clear

suppositions based on any particular set of data available. Even analysing only one single

organisation or company to determine whether their advertising choices are providing them with

good value for money both in the short term and in the long term (on the supposition that all

advertising moves are aiming to provide by an increase in profit for the organisation in the

immediate instance of bringing in cash flow and in the longer instance in terms of increasing the

company’s “know-ability” and reputation so that customers who see/experience an advertisement

now may continue to recognise and foster good-will towards a company long into the future)

requires an entire army of consultants and even then, much of the findings will be based on theories

and speculation.

In order to understand the overall movement of all organisations in an economic climate, all

research must necessarily be based on a broad range of conjecture, supposition, and some creativity

in reading the same data in different ways. Especially when it comes down to understanding how

advertising budgets are drawn up and portioned out, something that is kept classified in most

organisations and with good reason, it is incredibly difficult to produce viable, relatable research

results. There can be no recommendation given to future research before stating the obvious need

for more and clearer data to be obtained.

5.2 CREATE NEW RESEARCH THAT IS BASED ON PRIMARY DATA

While a great deal of research has been done in the area of recessionary period advertising and

nearly all of it has shown that there is a clear link between the percentage of money invested in

advertising during a recessionary period and the profit of the company in the short term, as well as

the long term growth of the company’s brand image, there is still a great deal of missing

information in terms of understanding the particulars of this phenomenon. As nearly all of the

information related to a company’s budget is confidential in nature, even to those within the

organisation itself or to non-primary stockholders, it is often impossible to fully understand the

direction in which advertising budgets go in any given economic quarter.


38

If it is not possible to get clear numbers on what a company is spending on advertising and where

those pounds are being spent, as well as how – then it is equally impossible to assess the change in

behaviours during recessionary periods and after the recession ends.

It is only through getting clearer market information that a real understanding of the true

implications of advertising during a recession can be understood. What would be extremely

advantageous is for future research to focus on gaining budgetary numbers from organisations

across the spectrum of organisational types, including consumer goods organisations, industry

goods, and service goods organisations and comparing that to other organisations’ financial

numbers. Even with this information anonymised, the value in understanding the financial

movements of companies during economic changes would be incredibly beneficial towards the

understanding of the potential added value from advertising during different economic climates.

5.3 ANALYSE RESEARCH AGAIN POST RECESSION

All information that is analysed during recessionary periods should be examined again during non-

recessionary periods. While it is understood that the overall philosophy and mission of an

organisation may remain the same regardless of the economic climate, it is also understood that the

short term goals and behaviours of an organisation will change during times of financial stress. It is

only be analysing the advertising behaviours of a company before, during, and after a recession in

comparison to their profit margins, brand recognition, and stock market value – would it become

clear what the real implications are of advertising investments during economic downturns.

While it is necessary to consider the difference between advertising budget movements during this

recession and when the economic climate improves, it is also necessary to compare the changes to

similar periods of economic changes during other, similar, economic periods. The reason for this is

to account for changes which have less to do with the actual changes in economic periods and more

to do with generalised changes in inflation, market values across an expanse of companies and

organisations, and changes in technology which have affected the manner in which advertising is

taken up. Consider, for example, the changes that took place in advertising after television became

an established technology as compared to the years when it was not an option. This can clearly be

paralleled with the differences that are being seen now as the Internet becomes a technology that is

part of every home and is becoming more and more a daily reality for most consumers. This is in

stark contrast with the market just ten years or so ago when the lack of widespread, fast broadband

Internet meant that there were severe limitations on what advertisers could reasonably do with

advertising on the Internet.


39

CHAPTER 6: CONCLUSION

6.1 FINAL CONCLUSION

After reading through and analysing so much information that has been published on the behaviours

of organisations during recessions as regards their advertising, as well as on end results of that

advertising behaviour, it is impossible to conclude anything other than that there is real benefit to

organisations heavily investing in market advertising as and when they are able to during a

recessionary period. It is clear that any money invested in advertising during an economic downturn

will often provide short term benefits in terms of increased profit and value to their stock market

shares, but will nearly always offer up a long term increase in asset value brought upon by an

increase in brand knowledge and recognition. As these benefits can and often do last for three years

after a recession has ended, it is clear that there are few other investments which can have such a

long-term benefit to an organisation.

It is also important to consider the implications of the overall movements of advertising expenditure

across a national or even global level. It is clear that where recessions are affecting the economical

growth of an area, then there is more likely than not either a present or a future downturn in the

advertising expenditure of the same area. This is especially true for the industries which find

themselves most affected by the economic downturn and for those areas which are more traditional

in their branding methods and usual means of advertising.

With this in mind, it is increasingly evident that while the global movements for advertising

expenditures may indicate that the usual and best response is to decrease the advertising expenditure

until the economic atmosphere becomes more favourable, the smart organisation is the one which

takes a much more pro-active approach in how they deal with their marketing and advertising. It is

increasingly clear that it is the companies which are able to withstand the recession and continue to

invest their monies in a substantial fashion into advertising that are best able to not only continue on

in a “survival mode”, but to actually use the recession as a means to grow and develop as a

company and as an organisation. By parlaying a softer market within the advertising market into an

increase in value of advertising money, a company is able to use the recession as a time to put more

investment into their marketing without causing damage to their bottom line.


40

Advertising itself is in a state of change, as traditional means of advertising are beginning to lose

their edge over newer, more innovative ways of reaching their markets. As more and more

organisations are turning to the Internet and mobile phone networks as a means to engage their

consumer pool and develop a brand which can find its niche, there is less motivation to invest

money into the older and “slower” means of advertising, such as print and broadcast. This is

especially essential when considering two key elements: first, this is important for companies

which have less money to invest in advertising, as online advertising is often substantially cheaper

than traditional means of advertising; and second, this means that there is generally going to be

more openings for companies to take advantage of the lesser interest in the other forms of

advertising.

As advertising organisations must compete both with a reduction in advertising budgets coming in

during a recession and compete with the cheaper forms of advertising available online, it is possible

for companies to leverage their budgets into ever greater advertising packages, this is one of the

principle ways in which a company or organisation can use the recessionary period as a time of

growth and increase their profit margin and their long term market value. Being seen as a company

which is able to use all changes in the economic climate to their advantage is a reputation which

will earn them both customer loyalty and the approval of their stock market shareholders.

It is impossible to examine the evidence surrounding recessionary advertising movements and

conclude anything other than that the best and smartest organisations and companies will use a time

of recession to invest even more heavily into their advertising budget so as to strengthen their own

market position and to take advantage of their competitors less pro-active movements.

With regards to the effects of brand image during an economic recession, there is no clear evidence

of any major change. It is only normal that the perception of a brand may shift from time to time but

the brand image mainly remains constant, unless the organisation faces major financial or other

issues that could harm its image.


41

CHAPTER 7: REFERENCES

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