Legend, Inc. Newsletter: The Dynamics Of An Advertising Decision

The Project Log
An Advertising Newsletter

The Dynamics Of An Advertising Decision

Your instincts demand that you scrutinize your advertising budget and cut it every way possible, especially when business is not as good as it should be, but in fact research shows that it's those with the courage to maintain or increase their advertising budget, no matter what comes, recession, boom, slow-down, who reap a major sales advantage over their competitors who panic and assume a defensive posture. This advantage expands as time passes.

Business cycles come and go. Decisions made about advertising often span cycles or phases of cycles when circumstances are quite different from when the decision was made. So any decision you make can have repercussions impossible to foresee. But research shows that nervous or indecisive advertisers lose ground to the brave and can't gain it back. Often it is the most uncertain part of the business cycle, the downturn, when the greatest gains can be made, in the short and the long term. Surprisingly increasing your advertising in a downturn has much the same effect on profits as cutting your advertising does. According to the research of the American Advertising Agency Association's Center for Research & Development, a well-known and respected source for marketing measurement, conducted during a recession, "advertisers who yield 'to the natural inclination to cut spending in an effort to increase profits in a downturn find that it doesn't work.'" This study also uncovered the fact that aggressive downturn advertisers picked up 4.5 times as much market share gain as their overcautious competitors, leaving them in a far better position to exploit the inevitable upturn and economic expansion when it came.

Continuous advertising sustains market share and leadership. And maintaining and improving your position is much, much easier than recovering it. Consider the leading advertisers in your market and in the nation; their names are household words. These marketers have maintained a relentless commitment to their marketing in good times and bad. Just one example is the venerable Kellogg, which had the guts to pump up its ad spending during the Great Depression and cemented a market leadership it has yet to relinquish.

Space and time have no volume large enough to fully hold the list of names of those who lacked the gusto and chose to cut their ad spending when things got tough. But then, who cares, anyway?

So, when you contemplate your advertising decision next budget time, remember that it is easy to do the financial debit and credits, but marketing is really about vision and courage and commitment. And the decisions you make take on a dynamic all their own once made. As the saying rightly goes, the best defense, after all is said and done, is a good offense.

SOURCES:
McGraw-Hill Research, The Center for Research and Development.
Profit Impact of Market Strategies, The Strategic Planning Institute, Cambridge, MA.

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