It’s official – we’re in a recession. Pennies are being pinched. Belts are being tightened. Companies are looking for ways to save money. But should the marketing budget be cut along with first-class plane tickets and four-star hotels?

You could Google “marketing in a recession” or “advertising in a downturn” and find a few dozen articles on the subject, but luckily you don’t have to, because we’ve already done it. We’ve gone through a slew of white papers, research papers, magazine articles and the occasional blog entry, and we’ve boiled the whole mishmash down into a nice palatable stew. Then we added our own point of view to give it a little meat.

Enjoy.

What The Marketing Experts Have To Say

From a white paper by the president of marketing company; emphasis ours.

“Statistics Support the Value of Steady Marketing
Numerous studies have shown the importance of advertising in a recession. The longest running, most widely recognized studies are from the Strategic Planning Institute (SPI)…According to the Strategic Planning Institute:

• Rapid changes in market share occur in a recession when weak competitors cut spending or exit the market.
• The greatest gains in market share are earned by firms that increase spending in a recession. (Other studies have suggested that simply maintaining advertising in a recession can also improve share of market.)”

From a white paper by the president of a sales and management consulting firm; emphasis ours.

“Advertise! And better yet, advertise a lot. Why? Because, there is ample evidence to support the fact that maintaining or increasing your advertising and marketing investment in slow times is actually more effective than in good or growth periods.”

“A key reason is that when the marketing and advertising ‘noise’ goes down, the voice of those still talking sounds that much louder. When your competition (and others outside of your industry) have stopped advertising or have reduced their marketing efforts, it’s your opportunity to saturate the market with your message.”

From an article on a marketing web site; emphasis ours.

“Consumers are more likely to have confidence in ailing financial brands if they see ads for them during the economic downturn, according to research from Nielsen IAG, which supports the theory that companies that do not advertise are risking widespread public perception that they have failed or are otherwise on their way out.”

From an article on a marketing web site; emphasis ours.

“More than 48% of US adults believe that a lack of advertising by a retail store, bank or auto dealership during a recession indicates the business is likely struggling, according to a study from Ad-ology Research.”

So the marketing experts and the advertising industry agree – you should keep spending money on advertising during a recession. In fact, if you don’t then you’re a dope! “Yes,” you might say, “but all these opinions and facts come from people who make money from marketing. Of course they think I should keep spending money on it.” And you would be right. So let’s get some more objective opinions.

What Academics Have To Say

From “Innovating Through Recession” by Professor Andrew J. Razeghi, Kellogg School of Management, Northwestern University; emphasis ours.

“Consider the evidence. In a study of 600 business-to-business companies, McGraw-Hill Research found that businesses that maintained or increased their advertising expenditures during the 1981-1982 recession, averaged higher sales growth during the recession and in the three years following. By 1985, sales of aggressive recession advertisers (those that either maintained or increased spending) had risen 256% over those that cut-back on advertising. Likewise, in 2001, another study found that aggressive recession advertisers increased market share 2 1/2 times the average for all businesses in the post-recession economy… Now is the time to increase communications, not cut it back.”

From “Marketing Your Way Through a Recession” by John Quelch, Senior Associate Dean and Lincoln Filene Professor of Business Administration at Harvard Business School; emphasis ours.

“Maintain marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions.”

From “When the Going Gets Tough, the Tough Don’t Skimp on Their Ad Budgets,” published on the web site of Wharton, the University of Pennsylvania’s business school; emphasis ours.

“With corporate managers under enormous pressure to control costs and maintain liquidity in the current credit crisis, advertising budgets often appear to be a dispensable luxury in the struggle to survive. Executives who succumb to that temptation, however, put the long-term future of their companies at risk, according to Wharton faculty and advertising experts.

“ ‘The first reaction is to cut, cut, cut, and advertising is one of the first things to go,’ says Wharton marketing professor Peter Fader, adding that as companies slash advertising in a downturn, they leave empty space in consumers’ minds for aggressive marketers to make strong inroads. Today’s economy ‘provides an unusual opportunity to differentiate yourself and stand out from the crowd,’ says Fader, ‘but it takes a lot of courage and convincing to get senior management on board with that.’ ”

From “Turning adversity into advantage: Does proactive marketing during a recession pay off ?” by Raji Srinivasana, The University of Texas at Austin; Arvind Rangaswamyb & Gary L. Lilienb, The Pennsylvania State University; published in International Journal of Research in Marketing; emphasis ours.

“A proactive marketing response to a recession, especially when other firms are cutting back, may provide a competitive advantage to the proactive firms (Miles, 1982). In hostile environments, a proactive strategic posture and organic structure result in superior performance (Covin & Slevin, 1989). As other firms in the industry reduce their marketing activities (e.g., advertising) the relative market presence gained by the proactive firm could help it achieve superior market performance. As other firms in the industry reduce their marketing activities during a recession (Picard, 2001), the proactive firm will increase its marketing activities, gaining a higher share of voice in the marketplace, and acquire and retain customers. In such situations, firms that invest aggressively in marketing send a reassuring signal of confidence to concerned customers about their staying power and provide an incentive for customers to switch from weaker brands/firms.”

and…

“Although most accounts (e.g., Hillier, 1999) stress advantages that accrue during the post-recession recovery, our findings suggest that there are immediate returns as well. Therefore, a pleasingly positive result from our study is that firms do not have to wait until a recession is over to realize benefits from the marketing investments they make during a recession.”

So marketing experts, the advertising industry and academics agree – the best thing to do during a recession is keep on advertising, keep on marketing, keep on keeping on. But is it that simple? Of course not. That’s why we’ve saved the best for last.

What We Have To Say

Don’t Just Spend Money – Have The Right Strategy

Just spending a lot of money on advertising and marketing is pointless without a good strategy. At The Bloom Agency, we insist on developing a marketing strategy before we do anything else, because everything else – the messaging, the media plan, even the budget – should be based on that strategy. And in a recession, having the right strategy is even more important, because it allows you to truly maximize your marketing dollars.

Don’t Just Shout Your Name – Tell Your Story

Yes, bad advertising can create awareness, but so does shouting your name in a crowded theater. Your goal shouldn’t just be awareness of who you are, however. It should be awareness of who you are and what you have to offer. It should be awareness of who you are and what makes you different. It should be awareness of who you are and a desire to know more. For that you need well-developed, well-crafted, well-thought out ideas. You’d be amazed how effective a billboard or a 30-second TV ad can be when they’re done well, and you’d be equally amazed how ineffective they can be when they’re done poorly. Don’t waste your money, but spend what you need to tell your story and tell it right.

Don’t Just Tell Your Story To Everyone – Tell It To The Right People

Everybody loves ice cream, but let’s face it, there are places even ice cream shouldn’t be advertised. (Web sites for the lactose intolerant, for instance.) And in a recession it’s vital to know that the money you’re spending is being spent to reach the right audience. You need a well-designed media plan that’s based on research and demographics, not what magazines your spouse reads or the TV shows your kids watch.

Don’t Just Buy Your Way In – Earn Your Way In

Anybody can spend money and buy TV time or ads in newspapers. The smart marketer earns his way into the media by doing things a new or different way, by helping people who need help, or by simply being audacious. Stunts, events, sponsorships and other public relations techniques are a great way to earn you free publicity and maybe even some goodwill. If you have less money to spend, be creative and you might just get your story told for free.

So that’s our take on it, or at least part of it. (We could say a lot more, but we know you’re busy.) To sum up, we say that you should always get the most out of your marketing budget, whether it’s a recession or not, but in a recession it’s absolutely vital. And we also say that if the people who are spending your marketing dollars aren’t doing that, we suggest you find someone who will. (Hint, hint.)

We’d love to hear your thoughts in the comments section.