Economic Downturn? Turn up your Marketing and Advertising!

by Chaun Soh

With a possible recession looming, it's obviously important to keep an extra close eye on your marketing and advertising spend.

At the same time it's essential to avoid hitting the panic button with across-the-board, knee-jerk cost cutting.

Marketing and advertising budgets are always an obvious target in tough times, the hope being that reducing them will somehow create a better-looking bottom line.

That's an illusion at best, a bandaid 'fix' that's nothing more than juggling figures. The reality is that such cuts are a step backward, weakening marketing presence when it most needs to be strengthened.

Business history books are filled with accounts of successful companies that have maintained or increased marketing and advertising momentum during recessions — and leap-frogged their competitors.

Most such companies have come out of recessions stronger, more profitable than when they went in, having sharpened their focus and weathered the economic storms through more effective budgeting.

It's important to remember, too, that advertising is an investment in your business not just some avoidable expense.

Here are three reasons why your marketing and advertising spend should be maintained or increased during difficult times:

1. Solidify your customer base

Effective marketing strategies and strongly targeted, meaningful advertising are what will make your company recession-proof.

Since many of your competitors will cut back, this is your time to really differentiate your business and strengthen your competitive advantage.

Think of it as an exciting opportunity to sharpen your marketing and advertising strategies and put them to work — while many of your competitors hesitate, waver and lose out.

2. Maintain brand equity

Maintaining your brand presence is a crucial, ongoing business investment. The moment you reduce this, you risk an immediate, corresponding reduction in brand strength.

Studies have shown that it takes four to six months to see the results of an advertising program. Cutting back during a downturn is like throwing away your investment to date. Maintaining it will cost much less than rebuilding later.

This doesn’t necessarily mean you shouldn’t change anything. You need to get the most out of your spend by re-examining your communications strategies.

It is essential to be hard-hitting and informative — giving prospects reasons to choose you and make existing customers buy from you again and again.

That's about demonstrating value, not empty image-building and unfocused 'pretty' creativity.

Better to yell and sell (look at Harvey Norman's continued success) than to send out meaningless pretty pictures and imagery which say nothing and persuade nobody (look at most car ads and commercials).

3. Cut into your competition

Advertising during a recession can actually provide an opportunity for companies to dominate their market. Many mistakenly assume that because money is tight, customers will buy less — meaning money spent on marketing and advertising will be wasted.

Another false assumption is that it’s safe to reduce these budgets just because the competition is reducing theirs.

Not so. Research by economists and business analysts has revealed that companies maintaining or increasing advertising during periods of economic slowdown will boost market share.

Strong companies are likely see an increase in sales over those which fragment their marketing and decrease their advertising. It stands to reason: they reduce their market presence while those with the courage to persist increase theirs.

A recession is not the time to get gloomy. Instead it is an opportunity for smart businesses to differentiate their company and even dominate their market.

Need help with your advertising? Give us a call at 03 9824 4882 for a free initial consultation. Meanwhile, please visit our website to see our portfolio.