Advertising Lessons From Past Recessions

I was visiting with my friend, Larry Thomas, last week about how the recession is impacting local businesses. Larry and his wife own L.A. Floral and not only sell flowers, but "Larry the Botonist" takes care of the plant life in many office buildings in Kansas City. What was interesting about our conversation was that he reminded me that I should be telling my clients about the history of advertising during the depression. He said that historically, companies that advertise during an economic crisis increase their share and are better off than their competitors. Maybe I've been watching too much MythBusters, but the cynical side of me decided that I should find out if this is true and if so, take Larry's advice and tell all of my clients about it!

Here are some facts:

• 86% of American executives agree companies that advertise in a down economy stay more top-of-mind when purchase decisions are made ( 2001 Media Life. , May 29, 2001 © )


• Companies that decreased or eliminated their advertising, saw their sales drop 4% in Year 1, 12% in Year 2 and 11% in Year 3. By Year 5, sales of aggressive recession advertisers had risen 256% over those that had not maintained their advertising. (Epoch Times, Dec 2008, McGraw-Hill research during the 1981-82 recession, n= 600 Companies)


• A MarketSense study during the 1989-91 recessionary period shows brands such as Jif Peanut Butter and Kraft Salad Dressing increased their advertising and experienced sales growth of 57% and 70% respectively.


• During the recession of the early 1990s, Nike tripled their marketing spend, resulting in profits nine times higher in the period coming out of the recession than prior to it. This eliminated Reebok as a competitive threat and built the platform for global dominance (Branding in a Recession, Interbrand Corp, 2003)

I have also read many articles that mentioned Kellog's vs. Post cereal in the 1920's-1940's. According to legend, they were neck in neck and when the depression hit, Post cut their ad budget and Kellog's increased theirs. After the depression Kellog's became the leader and remains in that position to this day. There's a similar story about Ford & Chevrolet where Ford was outselling Chevy 10-1 before the depression. During the crisis Chevy launched an aggressive campaign and ended up leading when the depression ended.

I remember a client that I talked to in December of 2008 telling me that he'd rather start turning off more lights in his store before cutting off the "lifeblood" of his business being his advertising. While I don't wish for any of my clients to start bouncing payroll, I do recommend taking a lesson from history and stealing some share during our current financial challenge knowing that when things turn around, you'll be stronger for it!

What changes is your company making to remain competitive this year? How has the economy affected you or your competitors ad campaigns?