When the economy starts to hint of a downturn, many businesses begin cutting this and eliminating that, and media spending is often the first thing to go. But historically – based on research conducted over the last 80 years – maintaining or even increasing media spending can give businesses an advantage over the competition. Results identified in the 1920s are still true today. The pioneer study of advertising spending during tough economic times was undertaken by Roland S. Vaile. His report,

“The Use of Advertising During a Depression,” appeared in the April 1927 issue of the Harvard Business Review. Subsequent studies over the years have reported similar findings.

• Vaile’s study of magazine advertising (the major medium at that time) found that companies that had continued to advertise during the economic downturn of 1921-22 were 20% ahead of where they had been before the recession, while companies that reduced advertising when the bad times hit were still in the recession, 7% below their 1920 levels.

• A study tracking advertising spending and sales before, during and after the recessions of 1949, 1954, 1958 and 1961 revealed that sales and profits dropped for companies that cut advertising and that long after the recessions ended, they lagged behind the ones that had maintained their ad budgets. (Buchen Advertising)

• During the 1974-75 recession, companies that did not cut advertising experienced higher sales and net income during those two years, and during the two years that followed, than those that cut advertising. (ABP/Meldrum & Fewsmith)

• During the 1981 recession, business-to-business firms that maintained or increased their advertising spending averaged significantly higher sales growth both during the recession and for the three years that followed. (McGraw-Hill Research)

• MarketSense studied results for 101 different household brands in the early nineties. Jif peanut butter and Kraft salad dressings increased ad spending. Jif’s sales increased 57%; Kraft’s went up 70%. In the beer category, overall spending was down, but Bud Light and Coors Light increased spending. Bud sales went up 15%; Coors went up 16%. On the other hand, Jell-O, Crisco, Hellman's, Green Giant and Doritos saw sales drop by 26%-64% after cutting their spending.

If you budget advertising as a percentage of sales, you may think it makes sense at the time to cut your ad budget when sales slump (or are expected to slump). But if you perceive advertising as an investment – a tool to build a bigger, stronger, and more profitable company over time – then you will relate your ad spending to the company goals instead of to sales figures.

At one time, it was assumed that once a customer purchased your product he or she stopped reading/watching your ads. Actually, customers do pay attention to those ads as a way to reinforce and reassure themselves of their decision.

Businesses need to recognize that building on and consistently conveying their brand pledge to their customers is essential for building and maintaining brand loyalty, even if the economy turns bad, thus making repeat sales more likely.

Building brand equity is most successful as a sustained effort over time; the returns are compounded. Cuts in advertising (that is to say, brand investments) during a recession have a cumulative negative impact on the long-term value of your brand. But if you continue to advertise, you may be better able to negotiate media deals and special opportunities. And when your competitors drop their advertising, yours will be more recognized.

With media spending as a part of your company’s integrated marketing plan, these advantages are built into the strategies and tactics that will sustain your brand through good times and bad. MillerWhite, an integrated marketing company, can assist you in developing an MW Fusion® integrated marketing plan and can propose a media mix, using tools like Arbitron and Nielsen ratings, that will support your marketing goals.

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