Why brands need to keep advertising in tough economic times – according to 100 years of data

Wondering whether to continue advertising right now? Or slash your ad budget completely? Find out why research shows successful companies keep spending in tough economic times.

From sudden recessions to September 11th, businesses and consumers have always faced tough economic times – most of them unpredictable.

And again now we find ourselves coping with the uncertainty and fall out of the coronavirus, COVID-19. At this stage, no one knows what will happen. And in the UK where we are headquartered, we’re facing daily updates and changes.

In times like this, it’s understandable that brands review their marketing plans and spend. But what’s the best approach to take? Should advertisers be cutting or even stopping their spend right now? Or is it wise to keep spending, albeit with a different strategy and messaging if you want to survive a recession?

To help you consider your position, we’ve collated research on advertising during economic uncertainty and tough financial times, and the outcome for businesses taking different positions on marketing during them. Here’s what we learned.

Companies who advertise during economic uncertainty see sales growth

MarketSense study during the 1989-91 recession concluded that that brands who increased their advertising saw significant sales growth. Examples include Jif Peanut Butter and Kraft Salad Dressing who experienced sales growth of 57% and 70% respectively.

Coors Light and Bud Light saw sales jump 15% and 16% respectively after incleasing their ad spend, and Pizza Hut sales rose 61% and Taco Bell’s 40% through advertising.

Further research by McGraw-Hill of 600 B2B companies learned that the sales of businesses who maintained or increased their advertising grew 275% more than those who did not, both during and after the recession.

And companies who reduce advertising in tough financial times SHRINK

Roland S. Vaile tracked 200 companies through the recession of 1923, and found that the companies who advertised during the economic downturn were 20% ahead of where they had been before it started. The companies who reduced advertising however were 7% below their 1920 levels.

Companies who advertised after 9/11 saw their market share rise

More recently, during the tough financial period that followed September 11th, the 25% of all companies who boosted their ad spending saw their market share rise more than twice as fast as it typically rises during a normal economy, according to a 2001 Cahners Advertising research report.

Buyers feel better about brands who advertise in a down economy

Advertising in tough times also increases loyalty to your brand. A survey into companies who advertise during tough times by Harris Interactive/Yankelovich discovered that 86% of people “… feel better about their commitment to products and services”. 86% also said these companies were front of mind when the time came to make purchasing decisions.

And as Mark Ritson says in Marketing Week:

“But this virus, too, shall pass. At some point consumers will return to the streets, the cafes and the various other activities that they have been denied during the dark days ahead. Keep the brand light burning, because the cost of snuffing it out for the rest of 2020 and then trying to reignite it next year is gigantic.”

The right messaging is important – and how we can help

All that said, this doesn’t mean you should simply roll out your pre-coronavirus marketing plan as if nothing has happened. That would be tone-deaf at best.

While it’s prudent to keep advertising right now, your messaging and marketing plan needs to be carefully considered. It needs to be sensitive to the market, and how people are currently feeling and acting. And your offers appropriate.

We’ll share more details about what kind of advertising and messaging is best to use soon.

In the meantime if you’d like to talk to us about how to sensitively advertise your products and services, and protect (and even grow) your market share right now through intelligent advertising, please get in touch.