It’s a cliché in client conversations in our industry that when times are tough, businesses need to at least maintain their current level of marketing activity, if not increase it. Easy for us to say, that means more work for us. But how convincing is this to the client hearing it? That is, how much truth is there behind the cliché?
Enough, it turns out, at least to keep using it. In a recent piece, The New Yorker business columnist James Surowiecki describes how the packaged cereal company, Kellogg, gained market share over its competitor, Post, by doubling its ad budget during the Depression. Post tightened up and Kellogg cut loose, establishing market dominance that remains to this day.
Apparently, economic downturns are not the worst time to launch new initiatives. Chrysler rolled out the Plymouth line in 1933, surpassing Ford as North American’s second leading automaker. Kraft introduced Miracle Whip in 1933, which became America’s best selling dressing in six months. And Texas Instruments brought out the transistor radio during the 1954 recession. We know that one caught on. In more recent times, Apple launched the iPod during the 2001 downturn.
Surowiecki cites a study of the 1981-82 recession that found that companies that “increased advertising or held steady grew precipitously in the next three years, compared with only slight increases at firms that had slashed their budgets.”
So the next time you feel tempted to drop that cliché into a client conversation, carry on. While not every company that spends on marketing during down times prospers, you can certainly make a historical case for it, given the right circumstances.
Here's the link to Surowiecki's article:
http://www.newyorker.com/talk/financial/2009/04/20/090420ta_talk_surowie...
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