MANY COMPANIES ARE CUTTING BACK ON ADVERTISING, WHY SHOULDN'T I DO THE SAME?

It has been proven that during a recession, businesses that continue to advertise are far better off during and after the downturn than those who do not. That being said it is obvious that when everyone around you is cutting back it, any advertiser who maintains a consistent presence is that much more in the mind of the consumers when they do make purchases. This model works because advertising is about momentum and the more momentum you can maintain the farther you can go when others pull back.

For example, if you compare advertising to pushing a car it would go like this. You get behind the car and start pushing and it just sits there, so you duck down and really put your back into it, it starts rocking and you get a little bit of motion. So you continue pushing, and you are getting tired of course, but it actually begins to pick up momentum, wohoo, if at some point you stop pushing that vehicle you lose all the momentum and it stops. Once it has stopped and you have practically exhausted yourself and your assets it takes superhuman strength to get it started again. It does not take too many of these situations realize that you never want to stop pushing it if you can help it. The same goes for advertising.

If you are a dealer or manufacturer the situation is similar. Let us continue with our example of advertising during a recession. Manufacturers spend countless millions of dollars branding themselves and then a downturn hits and they start cutting overhead such as SG&A, thus advertising and general administrative costs decrease in the short run to curb a decrease in sales. Eventually things pick back up and they start to think things turning around. So they decide to start advertising again, and at that point they have to spend at a higher level than if they just continued to advertise through the problem, and then they make possibly the worst mistake of the cycle and start discounting to drive sales. This in turn completely throws off any value you have accrued over the years.

These examples show the trend plain and simple. If you have a product or service that you invest in advertising for, why spend any money on convincing consumers your product has a certain value, when you are just going to turn around when things look bad and destroy that perception and your potential for profit.

-Greg Welteroth Advertising