In a recent article in MediaLife Magazine, Kevin Downey cites research that shows that a recession or slowdown is perhaps the best time to increase spending and build market share. He says that Cahners Publishing and SPI, for example, found in 1982 that advertisers that had the highest increases in ad spending increased market share by 1.5 points during a recession. That compares to only a 0.2 point increase during normal economic times for the same level of increased spending.
The American Association of Advertising Agencies, in a report called "Advertising in a Recession," cites a number of other studies that show a strong correlation between sustained spending and increased market share. In 1990, the WPP Group’s Center for Research & Development found similar results to Cahners. And as far back as the 1940s, '50s, and '60s, Buchen Advertising found that companies that cut spending had decreased sales and profits that extended beyond the recession itself.
As competitors cut back during a recession, advertisers with the financial resources to keep spending increase their share of ad exposures to consumers. And more exposure, in theory, means more sales.
O. Burtch Drake, president and chief executive officer at the AAAA, describes a report that says Revlon and Philip Morris gained market share from increased ad spending during the recession of the mid-1970s while Avon and Hershey suffered from ad cutbacks. Those findings, says the report, are useful at a time like this. It’s been clear for the past several months that the ad economy is in a slowdown.
"It’s hard to resist the temptation to cut back. But as a general rule, advertisers are aware of this and there’s a price to pay" concludes Drake.
Read more here.