As ad revenues plunge, companies who “go dark” will simply end up paying more to build brand awareness when the economy returns.
The collapse in advertising on mass media outlets, from TV and billboards to newspapers and magazines, is unprecedented. Even Twitter and Facebook are suffering (try not to sob).
ITV’s ad revenues have collapsed 42% as travel companies, shops and restaurants in lockdown feel there’s no point spending their money.
While that seems logical, it’s really not.
Instead savvy businesses should maintain advertising during an economic downturn for the following reasons:
- The cost of advertising drops during recessions. The lower rates create a “buyer’s market” for brands and businesses. This is especially so for digital marketing where most paid advertisements work on a bidding system meaning you can spend less and get the same results or spend the same and get more reach.
- Growing businesses are able to re-position themselves during a downturn because the “noise level” of competitors drops as they cut back on their ad spend. It also allows for businesses to re-position or re-establish their brand.
- Businesses that stop advertising in a downturn, will have to spend more a lot more money rebuilding their brand when the economy improves because by then, all rivals and competitor businesses are also jostling to get their name out there too.
Need some examples look no further then the Worlds richest man Jeff Bezos whose company Amazon sales grew by 28% in 2009 during the “great recession.” The tech company continued to innovate with new products and increased marketing and advertising during the slumping economy, which helped to grow market share.
In the 1990-91 recession, Pizza Hut and took advantage of McDonald’s decision to drop its advertising and promotion budget. As a result, Pizza Hut increased sales by 61%, and McDonald’s sales declined by 28%.
Whilst it is important to maintain advertising it makes sense to tailor the message to the times.