Hammock partner Susan Weiss of the national advertising sales firm the James G. Elliott Company shares some perspective on the value of advertising in today’s environment in the latest issue of their company newsletter Ads & Ideas:
It’s a question that marketers struggle with during periods of economic unrest: cut costs by reducing or eliminating the advertising budget, or else maintain or increase the brand’s advertising exposure?
Today’s b-to-b marketing decision makers have learned the lessons taught during past economic upheavals. Meeting a recessionary climate with aggressive advertising is, historically, a way to grow business during a recession and maintain continued growth after the recessionary period ends. A study conducted by BtoB magazine earlier this year finds that most business-to-business marketers are determined to hold or increase their marketing budgets during 2008.

I’d like to briefly recap the recent ABM release, “The Importance & Value of B2B Advertising During Times of Economic Uncertainty”. In preparing their presentation, the ABM reviewed pertinent research on this topic spanning nearly a century, from a 1923 Harvard Business Review report up through the 2008 study conducted by BtoB magazine.
Harvard Business Review’s 1923 report of 200 companies found the largest sales increases reported by companies that advertised the most during the recessionary year. In 1949, 1954, 1958 and 1961, Buchen Advertising Inc. released tracking studies of business to business companies, reporting that sales and profits dropped off “almost without exception” at companies that cut back their advertising. Furthermore, Buchen found that, post-recession, those companies continued to lag behind companies which maintained their advertising budgets.
In the mid 1970s, the American Business Press Study concluded that companies willing to adopt an aggressive marketing posture during recessionary times would maintain and increase their sales and profits not only during the downturn, but in the years to come. McGraw Hill’s Laboratory of Advertising Performance (LAP) quantified the benefit in 1985: companies which maintained or increased their advertising budgets during a recessionary period experienced average sales growth of 275 percent over the preceding five years.
The 2001 Yankelovich/Harris study found that nearly all executives polled agreed that keeping current as well as investing to remain competitive are important in a down economy:
“Even in a down economy…”

  • 99% agree…it’s important to keep abreast of new products and services for your business
  • 97% agree…it’s important to continue to invest to remain competitive in the future

“When you see a company advertising in a down economy…”

  • 86% agree… it keeps then top-of-mind when you make purchase decisions
  • 86% agree… it makes you feel more positive about that company’s commitment to its products & services
  • Source: 2001 Yankelovich/Harris Study, 505 respondents

In 2002, Pennsylvania State University’s ISBM Report concluded that, “The greater the proactive marketing of a firm during a recession, the better its a) market performance and b) business performance”. Findings from this study emphasize the value of risk taking and assertive marketing investments on market performance during recessionary times and beyond.
The ABM concludes that advertising aggressively in a recession can:

  • Boost sales and market share
  • Open a lead on more timid competition
  • Skillfully reposition a product to take advantage of new purchasing concerns
  • Give the image of corporate stability within a chaotic business environment
  • Give an advertiser the chance to dominate the advertising media.