During a recession, the first department that gets its budget cut is advertising. This is a huge mistake. Advertising in a recession is actually a smart move to grow your business, for the present and the future. According to McGraw-Hill’s research, a study was conducted on United States recessions from 1980-1985. Out of the 600 B2B companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256% growth by 1985 compared to their competitors who stopped or decreased advertising.
American Business Press analyzed 143 companies during the economic downturn in 1974 and 1975. Again, companies that advertised during those years saw the highest growth in sales and net income during the recession and the following two years.
There are rewards for companies that are aggressive with their advertising efforts in a recession. The numbers prove that. Here are a few reasons why companies should continue to advertise in a bad economy.
You Can Tailor Your Message to Make More Sales
During a booming economy, people are usually playing loose and fast with their money, so they are not as discerning. While you might think that is a good thing, it can actually hurt a lot of smaller businesses. Money is no object, so big brands can sweep up premium advertising spaces and blast at every target audience. But during a recession, consumers pull back on spending and are much more careful about what they do with their money.
This is where you can take advantage of the hand you are dealt with. The big brands will reduce their spending, giving you a chance to talk to people you would not usually talk to, while at the same time customizing cost-saving messages just for them. The first and foremost thing in their mind is money and how to save it. The consumer could get a quality item for less because they’re not paying for advertising and marketing. A good example is Beats headphones. The product is decent, they have a huge ad spend and the product design costs are high. This is your chance to talk more openly about prices and cost, and how you can help. Once the recession is over, you will have gained a new customer base that won’t go back to the competition.
Your Competition Won’t Advertise
Small businesses usually have a limited advertising budget. During a recession, it’s easy to make up some of those dollars by cutting back on advertising. But all that does is open up the marketplace for more savvy competitors. The presence the business has spent advertising on to build up is now an open field for the competitors who are willing to advertise.
During a recession, it is inevitable that your pool of potential customers will shrink. But, instead of cutting marketing like your competitors, maintaining or even increasing marketing can help you grow your business. Your marketing efforts will be more noticeable due to the reduction from your competitors.
You Can Create a Long-Term Position for Your Business
Standing out in the marketplace is difficult enough when you and your competitors are battling it out in the world of advertising. As your competition cuts back on ad spend, your advertising can cut through that clutter.
Consumers might not be spending as much, but they are still spending. If you are not the company they think of when they do spend, your sales will likely decrease. While your competition is cutting back, you have the opportunity to be the company consumers spend with now, while gaining their future business as you continue to advertise in good times and bad.
In a bad economy, there are several opportunities to expose your business to new consumers that aren’t always possible in a good economy. Every one of them can be explored to help you solidify your place in the market and stand out from the competition. In recent months, current events have caused widespread concern about our economy. If you are a small business owner and would like some professional help during these troubled times, contact i4 Solutions. We can help you stake your claim in your market before, during and after economic downturns.
