Why does advertising slump in a recession?
The FT notes that advertising budgets are being cut, typically by double digit percentages.*
If advertising works - that is, it sells more of what you're selling - you'd do more of it in a recession, wouldn't you? When every penny counts, surely you'd pump every available budget into selling more, including advertising. If advertising works...
Which just makes me even more convinced that advertising really doesn't work.
I also hear on the grapevine that operational marketing budgets are being cut at many tech vendors, as recession looms. Again, why would they do this if marketing works?
In a recession, every sale is harder to make, since customers are more reluctant to part with cash. Effective marketing must surely be an imperative.
Is this too simplistic a view? Please tell me.
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If advertising works - that is, it sells more of what you're selling - you'd do more of it in a recession, wouldn't you? When every penny counts, surely you'd pump every available budget into selling more, including advertising. If advertising works...
Which just makes me even more convinced that advertising really doesn't work.
I also hear on the grapevine that operational marketing budgets are being cut at many tech vendors, as recession looms. Again, why would they do this if marketing works?
In a recession, every sale is harder to make, since customers are more reluctant to part with cash. Effective marketing must surely be an imperative.
Is this too simplistic a view? Please tell me.
*Free registration required.
Labels: advertising, recession
posted by Duncan Brown at 9:50 am
2 Comments:
I imagine advertising slumps because if you have to cut costs, it's less painful to cut external costs than internal.
I also imagine that the advertising which gets cut is the kind where its effectiveness is hard to measure.
Companies place ads for all sorts of reasons - prestige, to support a publication, to please a customer, etc.
Tim
I am not sure I have ever heard advertising being run for 'Prestige' or to 'Please a customer'...but perhaps I have led a sheltered life.
I guess the point is that everything slumps in a recession, but Duncan I think you hint at another key question. Why is Advertising continually thrown out as a barometer in a recession - just like house price decline?
Duct Tape Marketing said a while back, "When you systematically measure every possible nuance of your advertising, both creative and placement, two things happen. You begin to develop advertising that is guaranteed to work and you cut out every ounce of advertising fat."
And there lies the truth. Whilst all advertisers ARE capable of articulating what they spend (or don't spend) on advertising during a recession they REMAIN incapable of articulating what works and what doesn't properly and scientifically.
And until that changes, the baby will be continually thrown out with the bath water.
Personally I'd go on to say that the Advertising industry is on a hiding to nothing anyway, because the smart marketers cut their advertising budgets 5+ years ago anyway - when they heard the creaks in the industry getting louder, leaving the late minority and the mega budget conductors to spend spend spend regardless, while they got on with what really matters: connecting with their audience.
Chris
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