Best time to advertise? Worst of times.
The signs are all there. The fear, pessimism, cutting back, layoffs, bankruptcies, unemployment, bail-outs, stock market plunges, spending declines, ominous headlines, grim predictions, herd mentality. Yes, we are in a doozy of a recession.
So, this is the time for businesses to cut back on advertising spending, right? Wrong. It’s counter-intuitive, but proven. The best time to advertise, in terms of five-year return on investment, is during a recession.
Recessions are almost as predictable as the seasons. We can’t predict daily weather, but winter is followed by spring. Recessions occur every 4-5 years and typically last 10 months (the range has been 8-16 months since 1948). If you plan to be in business for the next 10 years, you will likely experience two recessions. The smart marketer creates a war chest during boom years and has a spending strategy ready for the inevitable recession.
Since 1949, there have been many studies of the effects of advertising spending during recessions, and most studies have come to a similar conclusion: advertisers win business from those who don’t advertise (duh!), and advertiser sales and market share grow at a dramatically faster rate than non-advertisers for the next 3-5 years.
In one study, the advertisers sales growth was 14 times greater than non-advertisers. Holy competitive advantage, Batman!
One reason for this counter-intuitive result is an odd fact about consumer spending. Yes, during a recession consumers cut back on discretionary spending for a while. And so industries such as automobiles and convenience foods really feel the pinch. But eventually, the American consumer wants what they want. And so, total consumer spending actually goes up during a recession. In fact, for every recession of the last half century, personal consumption was higher during the bottom quarter of the recession than at the peak. Advertisers who pull back during a recession miss this spending spree and send prospective customers into the arms of their competitors who advertise.
Also, the effects of recession are not evenly distributed. There are always growth areas and industries. Madison is not suffering the same downturn as New Orleans. Shorewood neighborhood businesses are not hurting as much as more blue-collar neighborhoods. Epic Systems continues to hire, while smokestack industries continue to fire.
In fact, of over 1,000 industries studied by The Bureau of Labor, 72 grew faster than the available workforce during the last three recessions. Among the industries considered “recession-proof” are health care, security, self-storage, tax prep, education, and even veterinary services and pet supplies. If you are in a business-to-business category, consider targeting these groups.
During a recession, it is imperative that you stay in touch with and retain your core customers. Consider advertising offers that increase purchase sizes, reward loyalty, create opportunities for contact (such as events), or say thank you. Inoculate your core customers against competitors who advertise.
And don’t forget to communicate with your employees. Let them know that your business is solid and that you have plans for growth. They in turn, will communicate that to your customers and to the world. During recessions, customers consider who will still be in business a year from now. Employee word of mouth can make a difference. So can getting your name out there in advertising.
So advertise and grab some market share. Quick, before the economy improves!