Transcript Advertising in a Recession

Advertising in a Recession
It pays to maintain marketing pressure:
A review of the evidence
Guy Consterdine
Guy Consterdine Associates
24 February 2009
Objective
To assess the research evidence about the
importance of continuing to advertise in a
recession
Most marketers’ actual behaviour: cut adspend
Best policy: maintain adspend
Long list of studies examined
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Institute of Practitioners in Advertising (IPA), 2008
Millward Brown, 2008
Data2Decisions, 2008
Malik PIMS, 2008
Peter Field with IPA Databank, 2008
Ehrenberg-Bass Institute, Australia, 2008
Penton/Coopoers/BSI, 2003
ABM Guidelines, 2002
McKinsey & Company, 2002
Pennsylvania State University, 2002
Yankelovich/Harris, 2001
Prof. Patrick Barwise, 1999
Tony Hillier, 1999
McGraw-Hill Research, 1985
American Business Press, 1975
Buchen Advertising, 1961
Harvard Business Review, 1923
Budget-cutting options compared:
Typical brand (modelled)
Sales
Budget maintained every
year
Half budget in Year 1, back
to usual weight Year 2+
Zero advertising in Year 1, back to usual weight
Year 2+
DOWNTURN STARTS
1/0 2/0 3/0 4/0 1/1 2/1 3/1 4/1 1/2 2/2 3/2 4/2 1/3 2/3 3/3 4/3 1/4 2/4 3/4 4/4 1/5 2/5 3/5 4/5 1/6
Quarter
Source: Data2Decisions
Budget-cutting options compared:
Typical brand (modelled)
Eliminating budget in Year 1: sales take 5 years to
catch up
Halving budget in Year 1: sales take 3 years to
catch up
Profit foregone while sales are lower is likely to far
exceed short-term profit gain by saving adspend
in Year 1
Meanwhile market share likely to be lost long-term
Conclusions: 1
Immediate profits protected by cutting adspend,
but benefit is very short-term
Neglecting brand support in downturn will weaken
brand & make it less profitable post-recession
Price promotions damage profits and brand values
Brand values impaired in downturn are hard to
restore in upturn
Conclusions: 2
Share of voice matters
Keep share of voice equal to or above share of
market
It’s likely to improve market share in medium and
long term
A brand maintaining adspend while rivals cut theirs
automatically increases share of voice
Price of buying media space or time falls in
recession – exceptionally good value available
Conclusions: 3
Recession provides opportunities for marketers:
- to attack competitors
- to gain market share
- to gain market leadership
Can improve company’s stock market valuation
Consumer markets
B2b markets
Conclusions: 4
Results not broken out by medium
“Magazine advertising has all the characteristics
that we would believe makes advertising
especially valuable during a recession”
Keith Roberts, Malik PIMS
Advertising in a recession
It pays to maintain
marketing pressure
in a recession
A review of the
evidence
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