It doesn’t matter what the politicians say. It doesn’t really even matter what the economists say. Some say we’re in a recession. Others say we aren’t. Still others say we aren’t now but one is looming in the near future. None of that matters.

What does matter is what YOU think. You are going to act and spend according to your belief. If you believe we’re in a recession, then you’re probably looking for ways to cut expenses and shore up assets. For you, the recession is real. If you don’t believe that, then you’re probably carrying on business as usual. However, you’re still feeling the effects of others that do believe it.

So, let’s talk about how to handle a recession or an economic slowdown when it comes to marketing and advertising expense.

American Business Media, in its book “How Advertising in Recession Periods Affects Sales,” states: “The findings of the six recession studies to date present formidable evidence that cutting advertising appropriations in times of economic downturns can result in both immediate and long-term negative effects on sales and profit levels.”

Further, the Buchen Agency measured the effects of advertising for business-to-business marketers through successive recessions in 1949, 1954, 1958 and 1961. They found that not only sales and profits dropped off for those companies that cut their advertising, but in addition, when the recovery came about, these same companies also lagged behind those who didn’t cut back.

As a business owner, it’s a natural instinct to cull expenses when hard times hit. We all do it. It’s called survival. The point is not to cut expenses that help your business grow. There is plenty of statistical data to show that, if you have the foresight to implement the right strategies, an economic slowdown might be the best time for your company to grow.

When the president of Proctor & Gamble was asked his opinion about the reduced rates for ads for the 2002 Super Bowl, he said the company was taking advantage of the lower prices to do more advertising—with the goal of increasing market share. What a concept.

In their book, American Business Media found that:

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

So, let’s assume that all of those things are true. Let’s assume that the smart play during a recession or economic slowdown is to step up efforts to defend your brand and increase your market share. There are some practical ways to do this, particularly in today’s market.

  1. Look for ways to build word of mouth. Utilize the tools of today’s market- social networks, blogs, events, goodwill campaigns, shock campaigns, etc. Spend the money to create word of mouth. Word of mouth is far better than a simple impression on the local cable network. Leverage your creative assets, take a leap of faith and give the market something to talk about. Doing so will increase the effectiveness of every dollar spent.
  2. Be creative with your media buys. Be aggressive is buying up unused inventory with your local media outlets. This will allow you to pick up slots that your competitors have dropped- and, at a lower rate. Again, it’s about making every dollar spent as effective as possible.
  3. Invest in advertising that produces a higher rate of return or a reliable range of return. In good economic times, you want to devote about 20% of your budget (give or take) to tactics deemed “risky.” Risky tactics often have a higher payoff, but they are…well, risky. When times get tough, shave that back to 10% or so (again, give or take). Be sure you’re spending money on things that you know have worked in the past or that you know always produce a certain range of results. Don’t give up on risk altogether….just take fewer risks and be smart about it.

It’s the way of economics that there will be good times and not-so-good times. Expect it. But when the not-so-good times come, don’t throw the baby out with the bathwater. Be smart and find a way to grow your business even in a tense market. It can be done. There is a way. The reward will go to those who take it.

Here’s some additional reading on the subject…

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