Current economic indicators, business media punditry and personal observation all point to an economic downturn verging on a mild to moderate recession. Corporate America tells us that it started in fourth quarter 2000 and will probably continue through second quarter 2002. In short, we may be seeing a less damaging repeat of 1989-1991. For small business, a looming recession presents serious risks but surprising opportunity.
One such opportunity, presented in the guise of a conundrum, is whether or not to cut marketing and advertising spending during a downturn in order to prop up short-term profitability.
Defending the "no-cut" point of view is Jamie Turner, founder and CEO of the Atlanta-based marketing communications firm, Turner Fernandez Turner.
"Last month," said Turner, "IBM increased their advertising budget 17 percent. I also saw that their sales have increased 8.9 percent. Was it totally as a result of increasing advertising spending? No. But, is it safe to say that the two are related? Absolutely."
History Tells An Interesting Story
Research on the subject would seem to verify Turner's contention. A slew of historic studies all point to a definitive relationship between increased ad spending and growth in long-term market share and profitability. Although the studies originated from sources with a vested interest in claiming the primacy of advertising as a preferred marketing tool, even the most cynical and jaded among us would have to concede that historically, the data does make the case. The American Association of Advertising Agencies, or AAAA, reports the following findings in a commissioned study, Advertising in a Recession by Bernard Ryan Jr.
What To Do
For the average small business, the instinctive reaction is to spend less and protect profits, and the best way to do that is to make the easiest cuts, normally in advertising and marketing support. Nobody has to be fired and nothing has to be closed down. But for those who seek to be aggressive, there are a number of proactive tactics that will optimize brand performance during bad times. From "Advertising in a Recession," the following:
"Consumers don't stop buying when economies go though down cycles. They look harder for value," said Saatchi & Saatchi's Kevin Roberts, writing for Advertising Age magazine.
TFT's Turner has a more compelling take on the subject. "Think of it this way. If you're in a room with 20 people and they're all talking, all you hear is noise. But if 19 stop talking, suddenly the one person who's still talking can be heard loud and clear."
Alf Nucifora is an Atlanta-based marketing consultant. To correspond with him or to receive a copy of his free, monthly, online newsletter, contact him via e-mail: firstname.lastname@example.org or fax at (770) 952-7834.