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Advertising in a Recession

Advertising in a Recession. It pays to maintain marketing pressure: A review of the evidence Guy Consterdine Guy Consterdine Associates 24 February 2009. Objective. To assess the research evidence about the importance of continuing to advertise in a recession

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Advertising in a Recession

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  1. Advertising in a Recession • It pays to maintain marketing pressure: • A review of the evidence • Guy Consterdine • Guy Consterdine Associates • 24 February 2009

  2. Objective • To assess the research evidence about the importance of continuing to advertise in a recession • Most marketers’ actual behaviour: cut adspend • Best policy: maintain adspend

  3. Long list of studies examined • Institute of Practitioners in Advertising (IPA), 2008 • Millward Brown, 2008 • Data2Decisions, 2008 • Malik PIMS, 2008 • Peter Field with IPA Databank, 2008 • Ehrenberg-Bass Institute, Australia, 2008 • Penton/Coopoers/BSI, 2003 • ABM Guidelines, 2002 • McKinsey & Company, 2002 • Pennsylvania State University, 2002 • Yankelovich/Harris, 2001 • Prof. Patrick Barwise, 1999 • Tony Hillier, 1999 • McGraw-Hill Research, 1985 • American Business Press, 1975 • Buchen Advertising, 1961 • Harvard Business Review, 1923

  4. Budget-cutting options compared:Typical brand (modelled) Source: Data2Decisions

  5. Budget-cutting options compared:Typical brand (modelled) • Eliminating budget in Year 1: sales take 5 years to catch up • Halving budget in Year 1: sales take 3 years to catch up • Profit foregone while sales are lower is likely to far exceed short-term profit gain by saving adspend in Year 1 • Meanwhile market share likely to be lost long-term

  6. Conclusions: 1 • Immediate profits protected by cutting adspend, but benefit is very short-term • Neglecting brand support in downturn will weaken brand & make it less profitable post-recession • Price promotions damage profits and brand values • Brand values impaired in downturn are hard to restore in upturn

  7. Conclusions: 2 • Share of voice matters • Keep share of voice equal to or above share of market • It’s likely to improve market share in medium and long term • A brand maintaining adspend while rivals cut theirs automatically increases share of voice • Price of buying media space or time falls in recession – exceptionally good value available

  8. Conclusions: 3 • Recession provides opportunities for marketers: • - to attack competitors • - to gain market share • - to gain market leadership • Can improve company’s stock market valuation • Consumer markets • B2b markets

  9. Conclusions: 4 • Results not broken out by medium • “Magazine advertising has all the characteristics that we would believe makes advertising especially valuable during a recession” • Keith Roberts, Malik PIMS

  10. Advertising in a recession It pays to maintain marketing pressure in a recession A review of the evidence www.ppa.ie

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