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Advertising in a RecessionAdvertising in a Recession
It pays to maintain marketing pressure:A review of the evidence
Guy Consterdine
Guy Consterdine Associates
24 February 2009
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Objective
To assess the research evidence about the importance of continuing to advertise in a recession
Most marketers’ actual behaviour: cut adspend
Best policy: maintain adspend
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Long list of studies examined
• Institute of Practitioners in Advertising (IPA), 2008• Millward Brown, 2008• Data2Decisions, 2008• Malik PIMS, 2008• Peter Field with IPA Databank, 2008• Ehrenberg-Bass Institute, Australia, 2008• Penton/Coopoers/BSI, 2003 • ABM Guidelines, 2002 • McKinsey & Company, 2002• Pennsylvania State University, 2002• Yankelovich/Harris, 2001• Prof. Patrick Barwise, 1999• Tony Hillier, 1999• McGraw-Hill Research, 1985• American Business Press, 1975• Buchen Advertising, 1961• Harvard Business Review, 1923
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Budget-cutting options compared:Typical brand (modelled)
1/0 2/0 3/0 4/0 1/1 2/1 3/1 4/1 1/2 2/2 3/2 4/2 1/3 2/3 3/3 4/3 1/4 2/4 3/4 4/4 1/5 2/5 3/5 4/5 1/6
Sales
Quarter
Budget maintained every year
Zero advertising in Year 1, back to usual weight Year 2+
Half budget in Year 1, back to usual weight Year 2+
DOWNTURN STARTS
Source: Data2Decisions
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Budget-cutting options compared:Typical brand (modelled)
Eliminating budget in Year 1: sales take 5 years to catch up
Halving budget in Year 1: sales take 3 years to catch up
Profit foregone while sales are lower is likely to far exceed short-term profit gain by saving adspend in Year 1
Meanwhile market share likely to be lost long-term
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Conclusions: 1
Immediate profits protected by cutting adspend, but benefit is very short-term
Neglecting brand support in downturn will weaken brand & make it less profitable post-recession
Price promotions damage profits and brand values
Brand values impaired in downturn are hard to restore in upturn
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Conclusions: 2
Share of voice matters
Keep share of voice equal to or above share of market
It’s likely to improve market share in medium and long term
A brand maintaining adspend while rivals cut theirs automatically increases share of voice
Price of buying media space or time falls in recession – exceptionally good value available
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Conclusions: 3
Recession provides opportunities for marketers:
- to attack competitors
- to gain market share
- to gain market leadership
Can improve company’s stock market valuation
Consumer markets
B2b markets
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Conclusions: 4
Results not broken out by medium
“Magazine advertising has all the characteristics that we would believe makes advertising especially valuable during a recession”Keith Roberts, Malik PIMS
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Advertising in a recession
It pays to maintain marketing pressure in a recession
A review of the evidence
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