To Advertise in an Economic Slowdown or Not to Advertise - That is the Question

Sat, 11 Oct 2008 14:04:37 EST

Traditionally most businesses cut back on advertising during economic slowdowns. They see it as an expense rather than an investment. In any slowdown, with a company naturally worried about revenues and expenses, I urge them to look at expenses that are not bringing in the revenue - adjust the thermostat, remove a light bulb or two, change your credit card processer - whatever it takes.

As the total pie of the marketplace shrinks, a slowdown is the time to ramp up the marketing/advertising. A company needs to increase its market share during this time. Get a bigger piece of the pie. This not only helps the current financial situation, it also positions them for when the economy and market start turning around. They now have a larger market share (piece of the pie) of a larger market (a bigger pie).

A most important thing to remember, particularly in crunch time, is to track the effectiveness of your advertising. How many new customers did your door hangers bring in? How many widgets did you sell when promoting them in the newspaper? How many seminar customers registered via your email program? How many phone calls did you receive from your Yellow Page ad? Did the ‘click-throughs' really generate any business or just lookers?

I have worked with businesses that spent huge sums on advertising and didn't really know if it was working or what parts were working and which were not.

What is the return on that investment? What is the lifetime value of a new customer? What is the profit on each widget you sold? Did it cover the cost of the advertising? Did it add substantially to the bottom line?

There are success stories regarding increases advertising in tough times. In an economic slowdown, one airline bucked the trend of the others and beefed up its advertising. Short term it helped. They did not lose as much as the others. Their market share increase even as the total market shrunk. As the economy turned around they were positioned for the upturned economy.

I have had success stories when my initiatives were followed, but, it is a hard road convincing someone to spend more money when they are concerned about making payroll.

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To Advertise in an Economic Slowdown or Not to Advertise - That is the Question