Why it pays to keep advertising

MANAGING THROUGH THE RECESSION:Businesses that maintain their ad spend in a recession will increase sales, writes Tony Philpott.

AGORAPHOBIA, OR the fear of open and public spaces, is not just confined to individuals. In times of recession, many firms prefer to cower in their office or shops and avoid the public domain. To them, there is no more fearsome open space than the market place.

John Donegan, head of marketing at Post Bank, asserts that companies willing to raise their voices and continue advertising their wares in a depressed economy “will not only consolidate their existing position but will likely achieve a degree of dominance when the marketplace makes its inevitable recovery”.

While consumers may stop buying during a recession, it doesn’t mean they stop listening.

Radio is still heard, TV is still watched, and direct mail is still being opened. Unfortunately, as a consequence of the initial shock and awe that comes with a recession, many marketers cut their advertising budgets.

But if you keep your cool and maintain your advertising presence, when your competitors withdraw their voices from the marketplace your voice will be heard all the louder.

A McGraw-Hill study, involving 600 businesses, revealed that during 1981 and 1982, businesses gained higher sales growth both during the recession and in the following three years. And more significantly, by 1985 sales increased by 256 per cent compared to companies that had cut back on advertising.

Yet more research established that in 2001, advertisers that maintained their ad spending actually increased market share by 2.5 times the average when the recession ended.

This is of course predicated on the idea that your product or service has all its other marketable essentials in place; competitive pricing and relevance to the target consumer being just two mandatory areas that will bring traction to your efforts.

In North America, there is a tendency to increase ad spend during the initial phases of a recession: while this may not necessarily be a sustained affair, it is often part of a predatory strategy to force competitors to exhaust their marketing budgets.

David Bond, former marketing head of HSBC North America, once told this writer that “if an ad budget is a communications tool in good times, in a recession it’s a gun pointed at a competitor’s head”. The objective being to still have marketing bullets in your gun when your competitor runs out of ammunition. But, analogies aside, an eye on your competitors is just as important as an eye on your consumers.

In a recession, the media is as much a victim of reduced spending as you are. As advertisers cut back, media outlets respond with offers to attract more ad spend. There is greater value to be had and there is a greater willingness to accommodate consistent advertisers.

Those who maintain a presence are more likely to gain preferential treatment – whether it’s primetime radio and TV spots at a reduced rate, choice page-location in print media, or even extended up-time on billboards. Deals are there to be had. Negotiate.

A sustained advertising presence says: “I’m here for the long haul,” and it doesn’t just send that message to your consumers, it sends it to your competitors, and equally importantly, it sends it to your staff. The psychological importance of advertising activity should not be underestimated.

It’s an assertive declaration that your product or service is uninjured, unperturbed by economic woes and is front and centre in the competitive arena. While company morale is certainly a secondary benefit of your product’s visibility in the marketplace, it has a very real value during times of recession.

So, what if you absolutely have to cut your budget? There may well come a time when market contraction and reduced consumer spending dictate a tactical withdrawal. But it’s important to understand that advertising need not necessarily take place in mainstream, above-the-line media. What’s important is customer contact. How that contact is made is of lesser relevance than the type of media being used.

Direct mail is an effective means of maintaining customer contact; it is also a powerful tool with which to build long-term relationships. While not as visible as print and broadcast media, direct mail nevertheless brings an immediacy to consumer communications which, when properly supported by an appropriate database, can yield unexpected results. A good direct mail campaign can be cost-effective, and a good direct mail agency can bring the kind of specialist expertise that traditional agencies often lack.

Merely having a nicely designed website is not enough. In recessionary times, every single mode of consumer communication has to work harder. Key word searches may well deliver customers to your site, but the closure of the sale is what’s important.

Make your site shallow – don’t send your customers on a layered journey of clicks and pop-ups. If you have an offer, put it up front, express it clearly and make it easy for your potential customer to make the purchase. It’s tempting to over-design a website: flashy graphics and other inclusions can eat up memory. Remember that most domestic computers do not have the memory or download capacity of the machines in your office, and a site that is overburdened with graphics and animations can result in the sluggish performance of domestic computers.

In effect, customers can and will lose patience if your site is slow to load, and remember, your competitor is just one click away.

Make yourself easy to find. Search engine optimisation is a very powerful tool. If you are a supplier of gourmet cheese, for example, your site should include words and phrases such as “aged cheddar”, “organic stilton” or “gorgonzola”. What’s important is that you don’t talk to yourself, incorporate words into your site that your customers are more likely to use when searching the web.

Make your product easy to find and you will make sales. Check out Google AdWords for another cost-effective way of optimising your website.

Share of voice, top of mind, consumer recall; buzzwords that have had their meaning eroded by overuse. But during a recession, these words gain a renewed relevance. If you don’t maintain share of voice, you won’t be recalled. If you aren’t top of mind, you’ll be bottom of the list. And when affluence returns, you’ll have an uphill struggle to regain the consumer confidence you had acquired before the economic downturn began.

In Roman times, hawkers shouted the benefits of their wares in the agora, the market place to which citizens thronged. No doubt the Roman economy suffered intermittent downturns and no doubt some of those hawkers packed up their wares and left the market. But those who stayed and continued shouting reaped the rewards – they conquered their phobia and perhaps conquered the marketplace.