Advertising in a Recession

1
Advertising in a Recession

• It pays to maintain marketing pressure
• A review of the evidence
• Guy Consterdine
• Guy Consterdine Associates
• 24 February 2009

2
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

3
Long list of studies examined

• 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

4
Budget-cutting options comparedTypical brand
(modelled)
Source Data2Decisions
5
Budget-cutting options comparedTypical 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

6
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

7
Conclusions 2

• Share of voice matters
• Keep share of voice equal to or above share of
  market
• Its 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

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Conclusions 3

• Recession provides opportunities for marketers
• - to attack competitors
• - to gain market share
• - to gain market leadership
• Can improve companys stock market valuation
• Consumer markets
• B2b markets

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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

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Advertising in a recession
It pays to maintain marketing pressure in a
recession A review of the evidence www.ppa.ie