In a recession, marketing budgets have often been the first to go under the finance director’s red pen. A too-widely held belief among non-marketing management is that marketing budgets are discretionary and that companies can afford to “cut the marketing budget until times get easier”. Such a view is counter-intuitive. If there is a right time to cut marketing budgets it is in the good times, when sales are strong, demand is high and customers are satisfied with the product and service standards you deliver. The time to invest in marketing is precisely when sales are sluggish, demand is slow and customers need to be persuaded to buy. Marketers can ill afford to panic and must persuade company management that marketing is an essential investment. It should be argued that in a recession no company can afford not to advertise.
McGraw Hill, the US publishing house, researched 600 companies in the recession of 1981-82. According to this survey, those that continued to spend during the recession saw sales growth of 275% through the mid-80s; those that did not saw sales growth of only 19%.
Brands that sustain their advertising spend will also benefit from:
• Grateful media owners, who suffer more than most in the recession. Media partners are more open to negotiation when their advertisers are leaving in droves and competitive
rates can be locked in for the future.
• The demonstration of confidence that will communicate itself to employees and customers and give your company an edge.
• A multiplier effect over those of your competitors that have cut spend; spending the same could deliver twice the share of voice.
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