Facing A Financial Crunch? Don’t Cut Ad Spend

In every recession over the decades, businesses tend to be reactionary and want to cut their ad spending.

Why? Well, it just feels right: Let’s cut some of the fat wherever we can, including marketing and advertising.

However, we can also look to history to prove that times of economic uncertainty (like a recession or pandemic) are exactly when companies should NOT shrink back.

Let’s look at a few examples:

• In the 1990s, Jif and Kraft Salad Dressing increased their advertising in a recession and drove sales by 57% and 70%, respectively.
• In the 1980s, McGraw-Hill Research conducted a study of companies that increased advertising or maintained the status quo during the recession and for three years thereafter. The results? These companies grew significantly during difficult times, and companies that aggressively invested in advertising grew by 275% by 1985.
• In the 1970s, a study by the American Business Press also revealed that sales increased during and following a recession.
• Across the 1940s-1960s, an advertising company collected data for ad dollars spent vs sales through the recessions of 1949, 1954, 1958 and 1961. Not surprisingly, the companies that made cuts were the ones for whom sales and profits decreased. After the recession was over, the companies that didn’t cut advertising spend experienced more growth compared to brands that reduced spending.
• In the 1920s, studies proved that spending during hard economic times was the best approach. One in particular published by Harvard Business Review followed 200 companies over the 1923 recession. Those that continued to advertise as usual through the recession experienced 20% growth compared to pre-recession numbers. Companies that lowered their advertising spend ended up 7% below their pre-recession numbers.

This adage holds true in 2022. If your company is feeling the pinch, don’t succumb to the temptation to reduce your ad spending.

Give us a call to talk about how to maximize your advertising budget and get leads into your system, phones ringing off the hook, and customers walking in your door.