littlefield: don't disappear during a recession

3/11/2009

Littlefield: Don't disappear during a recession
by David Littlefield
The Journal Record

Recession brings cutting costs to the top of the list of (un)popular meeting topics throughout corporate America, and often leads to companies cutting marketing and advertising budgets in an attempt to remain profitable and, for some, viable. Taking that approach will produce the opposite result for many.

Research shows that companies that stop advertising spending in a recession lose public interest and, sometimes, faith. Disappearing from the economic landscape and the memories of customers and competitors will actually produce unwanted results, and cost the company more money in the long run.

Smart companies have realized the benefit of continuing their ad spending during these rough times. Just a couple of weeks ago, Kraft Foods, whose sales were down 72 percent last year, announced it will continue to invest in its brands in 2009, increasing its marketing budget to 8 percent. The company knows that staying in the public eye now is more important than ever; the big change will be a focus on a value message. Competing with private-label goods in the grocery aisle is tough these days, as consumers are increasingly looking for more ways to save money. Shopping store brands is one effective way.

Companies that continue advertising during tough economic times can quickly control the market. Customers lose faith in brands that stop advertising, sometimes because they are afraid the company is going out of business, and don't want to be stuck without support post-sale. Those customers will switch to brands continuing or increasing their presence, which, in the customers' minds, means that the company is solid—here to stay.

The company that shows itself as viable will not only close the deal now when times are tough, but will also build lifetime customer loyalty because customers will remember what brands were there during these times.

The trend has continued through each recession in the U.S.: during the recession of 1989-1991, McDonald's decreased its ad spending and saw a 28-percent drop in sales; Taco Bell and Pizza Hut increased their advertising and saw 40-percent and 61-percent increases in sales, respectively. More recently: In the last quarter of 2008, Campbell’s reported a 12-percent increase in sales after a major boost in advertising.

An awareness of the benefits of advertising and marketing spending during a recession will go a long way to ensuring that a company survives it. Customers need smart, connective communication with a brand to build loyalty, especially in times when so many companies are struggling and some are shutting their doors for good. A continuing presence—in whatever form, whatever channel of communication resonates with your customers—shows customers that a company is here to stay.

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