Don’t Lose Your Voice...Advertising Is More Important Than Ever

Don’t Lose Your Voice...
In a Difficult Economy, Advertising Becomes
More Important Than Ever

By Anne K. Richter, Contributor

In 1929, Kellogg’s and Post were engaged in a heated battle to conquer the breakfast cereal market. But then, an unexpected twist of fate threw both companies for a loop: the Great Depression. Kellogg’s made the decision to ramp up its advertising and continue its push to become the preferred consumer brand – Post, fearing tough economic times ahead, opted instead to slash expenses, starting with advertising. Most people know how the story ends: Kellogg’s leapfrogged Post in the market and has maintained a dominant position ever since.

And before you assume that the Kellogg’s success story would be irrelevant in a modern media context, consider this: in 2003, when the U.S. stock market hit 10-year lows, Apple made the decision to continue to invest in its brand. At the time, many in the business community questioned the wisdom of such a strategy, but today, as anyone with an iPod or iPhone can attest, it’s obvious that Apple got the last word. As Steve Jobs later explained, “Our belief was that if we kept on putting our products in front of the customers, they would continue to open their wallets…and that’s what we’ve done.”

All too often, advertising is the first thing on the chopping block for businesses facing a troubled economy. But as the Kellogg’s/Apple stories demonstrate, it can be a devastating mistake to neglect your brand and silence your company’s message for even a short period of time. Consumers have short memories when it comes to brand loyalty, and savvy competitors know it. Some of the most successful businesses have captured their market by simply having the foresight to view an economic slowdown not as a time to pull back; but rather, as an opportunity to pull ahead of the competition. 

The market is quieter when the economy goes sour. And this rare opportunity is two-fold for businesses seeking to make a greater impact. First, advertising in this context means that your message is more likely to be heard. There is less “buzz” to contend with. Second, from a more long-term strategic standpoint, it’s easier to hear your customer and recognize the needs that may not have been met within a booming, oversaturated market. Taking the opportunity to identify consumer needs and tailor your message directly to those needs will pay dividends now and in the future, after the economy turns around and the buzz inevitably returns. For Kellogg’s, it was a message of reassurance and stability that spoke to customers. For Apple, it was one of innovation and imagination. No matter what your message is, if you are able to make it meaningful to your customers and keep it alive during a “quiet” market, the impact will be considerable.   

But, one might ask, what is the point of advertising in the first place if consumers have less money to spend (or perhaps, no money to spend)? The natural instinct of many businesses is to assume that in these difficult times, consumers will forego spending on anything other than the absolute essentials. But it may not be that simple. Although unemployment and the weakened housing and credit markets will strain consumers, those with stable jobs will end up benefiting from measures designed to boost the economy – such as lower interest rates – and may end up (paradoxically so) even stronger consumers as a result.

But regardless of whether your customer has more disposable income or less than ever before (and whether your customers are individual consumers or other businesses) the absolute worst thing any company can do in any economic climate is cut off all communication with the clients it serves. In a study of 600 business-to-business companies conducted by McGraw-Hill Research, it was discovered that businesses that maintained or increased their advertising expenditures during the 1981 recession averaged higher sales growth both during the recession and in the three years following. The same trend held true in 2001, when aggressive recession advertisers increased their market share by 250% compared to the average for all businesses in the years following the economic downturn. An interesting side-note to these statistics is that in an economic boom, the same studies showed that while 80% of businesses increased advertising expenditures, there was no correlating increase in market share – because every one of their competitors was doing the exact same thing.

It’s also worthwhile to consider that the absence of a message to your customers may send a message in and of itself. And more often than not, it’s a negative one. Customers assume the worst, and therefore what starts off as an attempt to avoid financial trouble becomes a destructive self-fulfilling prophecy when the viability of your company and brand are called into question. Businesses should therefore weigh the costs of advertising in difficult economic times against the less tangible (but still measurable) costs of not keeping themselves visible within their industry.

Finally, it’s important to realize the impact of fear on the consumermarket. As FDR famously put it, the only thing to fear is fear itself. As an advertiser, you have the ability to contribute to that fear, or to help diffuse it. Advertising and open communication with customers and within the economy at large reassures consumers that while the outlook may seem bleak, it’s still “business as usual.” Keeping the buzz alive will keep the customer confident, and keep commerce chugging along even in the worst of times.