The U.S. has experienced nine recessions since World War II, which means we’ve lived in recessionary times one year out of every six.
A recessionary period is actually a great time to promote your agency an increase your market share and profits.
In a recession, clients usually significantly cut their marketing budgets, even though it is the most important tool a business has during this difficult time. Ad agencies tend to do the same, having a hunker down and wait mentality.
We are in a severe recessionary period with no end in sight. This leaves many businesses and ad agencies wondering where they can cut costs. Studies and experience prove marketing should be last on their list.
A series of six studies conducted by the research firm of Meldrum & Fewsmith showed conclusively that advertising aggressively during recessions not only increases sales but increases profits and market share.
This fact has held true for all post-World War II recessions studied by American Business Press starting in 1949.
- Kraft salad dressings and Jiff peanut butter both raised marketing budgets during the last recession and increase sales by 70% and 57%, respectively.
- Pizza Hut increased their marketing budget and increased sales by 61%.
- Taco Bell increased sales by 40% by increasing their advertising expenditures.
- Wal-Mart smothered competitors with Every Day Low Prices during the 2000-2001 post-bubble slowdown.
- During the 1989-91 recessionary period, most of the beer industry cut budgets, but Coors Light and Bud Light increased theirs and saw sales jump 15% and 16% respectively.
Agencies know that advertising in an economic downturn is not a drain on their clients profits but can actually significantly contribute to and increase in profits and market share.
McGraw-Hill Research in a study of U.S. recessions showed that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn’t keep up their advertising.
RMR & Associates provides this list of brands that creatively changed their messaging to reflect the new customer mindset and counter a recession:
- A-1 Steak Sauce’s message that “A-1 Steak Sauce isn’t just for sirloin anymore.” Indeed, its ability to enhance flavor applied equally to hamburger.
- Dow, maker of Ziploc food bags, shifted funds from Glass Plus cleaner to help introduce a new line of Ziploc freezer bags that protect the freshness of leftovers.
- Quaker Oats capitalized on two successful recession messages. First it reversed a long-term decline in sales by increasing spending for the message that its grain products are inexpensive sources of protein. Then it stressed value as actor Wilfred Brimley promised, “A bowl costs you one nickel and four pennies.” That message worked so well that Quaker allotted half its budget to it. Result? Powerful sales.
- Lipton successfully promoted its Cup-a-Soup line as not only conventional but inexpensive.
- Wendy’s met the recession with a head-on message: “Look, I know you have less to spend these days, but that doesn’t mean you have to eat less.”
- Ikea had a similar idea: “What recession? Sure the country’s going through a recession. That doesn’t mean you have to.” It worked.
The information above is the kind of data that agencies use to demonstrate to their clients, the importance of advertising in a down market. But this “do as I say, not as I do” mentality raises suspicion.
If agencies are hunkered down during a recessionary period, if they aren’t promoting themselves, if they aren’t using the tools they recommend to clients, then why should anyone else.
One major advertiser summed it up best.
“When times are good, you should advertise. When times are bad, you must advertise.”
A recessionary period is a great time to promote your agency an increase your market share and profits. Do the opposite of what your competition is doing. Develop a simple agency promotional plan that you can consistently implement using a combination of traditional and social media. Treat your agency as if it was your most important client.
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- Socializing Your Ad Agency’s New Business Development
- Major Shift in Advertising Means a Shift for Agency New Business Practices
- Four Ways Social Media is Changing Advertising Agencies New Business
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