Before Coronavirus, Aerospace Marketing Lab hosted a workshop with Marcus Sheridan, international keynote speaker and web marketing guru, to optimize our marketing strategies - and by extension, yours.
During one of our conversations he asked us, “Does the marketing department or sales department have a greater impact on an actual sale for a business?” As a marketing agency, we were inclined to say the marketing department and were pleased to hear that the trends would agree! However, Marcus went on:
“Even though they would say that marketing has a greater impact on sales, the marketing department is the first to go when the company hits financial trouble.”
...and he isn’t wrong.
When faced with uncertain economic situations, businesses instinctively cut costs. We’ve seen this before during the last recession in 2008, ad spending in the U.S. dropped by 13%.
And the current pandemic is showing similar results. According to the Interactive Advertising Bureau’s (IAB) March Coronavirus Ad Spend Impact Report nearly a quarter (24%) of respondents have paused all advertising spend for the remainder of Q1 and Q2 and as of March 27, digital ad spend is already down 33% and traditional media is down 39%.
It sounds dismal. And increasing marketing during this time can come across as self-serving, however, now is the time to act. You must, must, must buckle down on your marketing strategies and maintain your advertising budget.
Long Story Short
When you continue to invest in marketing - yes, clearly it is an investment - it can yield results for years.
In a study of U.S. recessions, McGraw-Hill Research analyzed 600 companies from 1980 through 1985 and demonstrated that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn’t keep up their advertising.
Long Story, Not-So Short
Let me introduce you to Procter & Gamble. P&G was born during the financial crisis in 1837. Instead of worrying about the crisis, William Procter and James Gamble focused on directly competing with 14 other soap and candle makers.
Fast forward to the Great Depression in 1929 when unemployment was at 25%, the stock market lost 90% of its value, and the mortality rate rose almost 10%, yet instead of erasing their advertising budget, P&G actively pursued new marketing avenues. In 1931, they created a marketing organization based on competing brands managed by dedicated groups of people. The system provided more specialized marketing strategies for each P&G brand. Their pièce de résistance was their sponsorship of daily radio shows aimed at homemakers, the company's core market. In 1933, P&G debuted their first episodic radio program, Oxydol's Own Ma Perkins. The program was so successful that P&G started cranking out similar programs to support its other brands, and by the end of the Great Depression in 1939, the company was producing 21 radio shows—and pioneering the “soap opera."
Throughout the rest of the 1900s, P&G continued to strategically advertise, gain market share, and expand their brands, even opening its first flight department in 1951 in Cincinnati, OH. And as the 2008 recession hit, P&G remained true to their strategies and were the largest advertiser that year, and today, P&G remains the world's largest and most profitable consumer products company in the world.
What This Means For You
When you cut back on advertising budgets, your organization will lose the “top of mind” status in consumers and therefore, you will lose sales. If you maintain or increase ad budgets when others cut back, you will find an increase in “top of mind” consumers, leading to a larger share of the market, leading to an increase in profits.
Now it’s time for action! Contact us HERE to learn more about how we can dig deep to help you weather an economic downturn.