Does Advertising During a Recession Really Pay Off?

Most savvy business owners and managers know that the best marketing strategy during a recession is to advertise as aggressively as possible. But, just in case you need some reinforcement to support that truism, consider the following information.

The first study conducted to measure the effectiveness of marketing during a recession was conducted by Rolland Vaile during the recession of 1923. He later published his report in the Harvard Business Review. It showed the biggest sales increases throughout the period during and following the recession were rung up by the companies that advertised the most.

The next studies were done during the recessions of 1949 and 1954. Again, results showed that companies that advertised had the most sales. But more importantly, it showed the companies that did not advertise not only lost sales during the recession, but continued to lag behind after the recession.

More studies were done during the recessions of 1958 and 1961 with the same results. But, this time they also measured profits. In every case, companies who quit or cut back advertising lost market share and lagged behind those who maintained their budgets.

Another study was done during the recession of 1970 with the same result. Then McGraw Hill conducted a study during the recession of 1981 and 1982 with the same result. Then David Ogilvy's agency Group Center for R&D did one during the 1990 recession. You guessed it: the same result.

That's ten separate studies over an eighty year period and every one of them returned the same result.

This is the time to be aggressive with your marketing. This is not to say you should be foolish with your budget and spend more than you can afford. But, don't do what so many business people do, which is to take the fastest and easiest route to cutting overhead by slashing their marketing budget while hanging onto other expenses that could be trimmed.

Television and radio are not dead yet

I just read a short article entitled "Agencies Need to Think More Facebook, Twitter, Less TV."

While my methodical, logical tendency is tugging at me to study the comparison between social marketing and traditional broadcast, then present a studied article with all kinds of facts and figures, I'm caving to impulse. Going with my gut, supported by my personal experience with what I see happening today.

Our agency has been ramping up our social media knowledge and skills as quickly as possible because we recognize its profound importance as time goes on. In the process, I've noticed a continuing increase of information and opinions on social media, to the point where it appears that some consider traditional media dead and buried. I suppose this is a natural phenomenon when something as new and ground-breaking as social media is discovered. We get caught up in the frenzy, and bail from our old ways like rats jumping off a sinking ship.

Except, the ship isn't sinking.

True, traditional media is becoming more fractured. But, just because the days of three primary networks, and a handful of local radio stations are gone doesn't mean the medium has lost its usefulness. Case in point. We have been running a television campaign for a chain of restaurants in the Sacramento California area. Since we started in June 2008, they have been up in sales every single month. And, up significantly, anywhere from 20% to 30%. And, this is in a recession! And, this isn't the only success story we've seen using traditional media.

What this shows is that it isn't just the media. It's finding the right message, then finding your audience. Sometimes the audience can be found on TV, sometimes on radio, sometimes in an industry magazine. If anything, it has made ad agencies more valuable than ever, because they are equipped to find the right mix of places where a client's audience hangs out.

Social marketing should be a growing part of the mix, no doubt. And for some, social marketing will be all that is needed, or can be afforded. But, the real marketing answer is in looking at the entire landscape of options and mixing them most efficiently to achieve the client's goals.

Rob

Guerrilla Marketing: step one

successful marketing in a recession often relies more on hard work and wits than a big advertising budget. You can build sales, despite the recession, if you start by paying attention to the people most likely to shop at your store. And, for many businesses, those people are the ones who live within a mile or so of your store.

In nearly every neighborhood, there are hundreds of opportunities to generate low cost or no cost sales promotions. All it take is a little time to get out of your store and circulate in your community. By focusing your efforts in the geographic area from which you pull the vast majority of your customers, you can zero in on potentially overlooked customers right in your own back yard.

But, don't just casually stroll through your neighborhood. Take time to observe and really study the geographic landscape of your surroundings. Whether you are the owner or manager of a single store, or supervise several locations, you can benefit from mapping out the area around your stores to make informed decisions about your local sales promotion strategies.

Start by creating a map of your store's geographic location. Include all main arterials, surface streets, businesses, schools, churches, retail centers, civic offices and so on. Work to create an intimate understanding of what's in your community. How many banks are there, how many schools? How many ice cream shops, how many places serve lunch? Study the landscape and see what you can learn about where people are going and at what time. Are there potential cross-promotion partners out there? Perhaps an auto body shop, post office or transit center would make sense. Or perhaps a local video store or dry cleaner. These are the observations you can use as a means of sculpting a plan. The better you know your neighborhood, the better you'll be equipped to spot opportunities.

Getting involved in your community and getting to know the various business owners out there will make it much easier to develop relationships that can take on many forms. As you survey the territory around you, stop in and say hello to the managers and operators in your community. Introduce yourself, stay for coffee, share a little about your current business and ask them about their recent hurdles or successes. In all, develop a rapport so that you can use this network to further your local store marketing efforts. The following ideas are just some of the possibilities.

Develop a promotion involving a local school or college. Demonstrate your product for a class or offer a discount to students through their campus newspaper.

Establish tie-ins with community stores. Offer to distribute their brochures if they'll distribute your brochures or coupons.

Provide a special "discount card" for employees of large-size businesses in your area.

Post your own sign or circular on local bulletin boards at supermarkets, schools, churches, businesses and clubs.

Offer your product, if it fits, to local charities as part of their fund-raising efforts.

Distribute or display your product at a high profile community events, such as concerts, street fairs or sporting events.

Make special offers with mailings to clubs or organizations in the area.

Create a special offer during narrow times of the day when you notice increased traffic, and promote it with window signs or sandwich boards.

The more people who get to know you personally, the more loyal customers you will see. Your community will appreciate any support you can give, and will extend their loyalty to your business relative to the time you devote to cultivating your community relations.

Advertising Strategies for a Recession

There have been many studies over time that have proven that advertising during a recession results in better sales during the recession and more explosive growth after it's over. In fact, most business people whom I've met know and understand this principle quite well. But, many continue to advertise using the same strategies they were using when the economy was robust.

A recession is an altogether different business landscape and must be approached with strategies that take this into account. We know that people tend to nest during a recession. Home and family become more important along with things that represent more traditional values.

Other traditional recessionary behavior includes changes in business relationships. Contract and finance terms tend to get renegotiated. Customers are more cautious with their purchases, as are businesses. People are more price sensitive. Customers may even trade down to less expensive models or temporarily quit buying some products.

Studies show that this behavior is caused more due to uncertainty of the future than a lack of funds. So, knowing all this, here is a short list of strategies that work best during a recession.

1.
People are looking for reassurance. Implement strategies that make buyers feel they are minimizing risk. Maybe enhance your guarantee or return policy. Or just include it more prominently in your messages.

2.
People are more comfortable with familiar things. Capitalize on your brand equity to reduce uncertainty. Include testimonials from past customers in your ads, or use product demonstrations. This might be a good time to remind customers of your longevity in the community. Implement a loyal customer program. Sponsor local events or activities. Ramp up your guerrilla marketing efforts and increase one-on-one visibility.

3.
If your product is a discretionary purchase, you may have to work harder to identify that which motivates people to buy and how the current climate is preventing them from acting. You may be forced to stimulate sales through extra incentives such as price cuts, financing offers, extra service or added value. Many marketing experts say you should avoid discounting. The truth is that sometimes you have to include that in the mix.

4.
If your product is a low priced discretionary purchase, emphasize the "reward" incentive. People will reward themselves with small indulgences because it makes them feel good and they feel like they deserve it.

5.
Include cost saving ideas, ways to help your customer's dollar go farther, or ways to get more use out of your product.

6.
Many people think there are too many sales until they are in the market for something. Then they look for a sale. Have short bursts of extremely attractive sales, surrounded by a solid branding campaign that emphasizes value and service.

7.
For business to business, concentrate on personal relationships, especially with current customers. Competitors will be targeting them.

8.
For business to business, concentrate on messages about products and activities that will improve your customer's bottom line.

9.
Concentrate on your core. Identify what you sell most of and sell the heck out of it. Identify what you do best, and ramp up your efforts even more. Identify who your biggest, most likely customers are and target them well.

10.
Implement an interactive strategy that makes connections with your best customers. Keep them engaged and demonstrate to them that you value them. There are many avenues, from blogging to e-mailing to Facebook, and yes, even Twitter. There is a combination that is best for you. Figure it out and do it.

You won't be doing everything that is listed here. But this should provide you with enough food for thought that you can take what is appropriate and run with it.

Increasing sales in a recession

It's true that some business categories and products actually experience an increase in sales during a recession. Those products usually represent a lower cost alternative to an otherwise routine buying decision. Some examples include beer as opposed to wine and spirits, fast food as opposed to sit down dining and second hand store sales as opposed to new products whose usefulness isn't significantly reduced by being used, such as books.

On the other hand, the harsh reality for most businesses today is that creating sales is a bona fide problem, requiring all the resourcefulness and ingenuity the entrepreneur can muster. It has been said that the new "up" is "flat".

There is actually some truth to that. But, a businessman should not aim for flat, even in a devastating economy such as we are experiencing.

Today, businesses have more marketing tools in their tool box than ever before. Of course, there are two sides to that coin. On one hand, more options means you can customize a plan more accurately than ever before. On the other hand, there are so many choices and combinations, it could take months or years and untold thousands of dollars before you figure it out.

Here are a few tips to help narrow your decisions.

1. MEDIA IS A GENUINE BARGAIN RIGHT NOW. Media is priced as a result of two factors: number the people reached and demand. Here is the paradox of a recession. There are more people home watching TV, listening to the radio and paying attention to media because they are not going out as often. Yet, advertisers have cut back so much that the media is in the midst of a discounting war just to get advertisers. The result is that you get more viewers for less money.

Our agency has been able to negotiate huge discounts and other added value for clients who use TV, radio and print. These days, you can even snag some prime time slots that normally sell for thousands for as little as a few hundred dollars.

This takes more money than time. But, the rewards can be great, and the value will never be better.

2. Interactive and social marketing is relatively inexpensive and highly targeted. Coordinating your e-mail program with your web site, optimization, blog, twitter, You Tube, Facebook and other applications can have a measurable impact on sales.

This takes more time than money. And, the learning curve will be a quite a bit longer to get it right, both technically and strategically. It's tempting to try this stuff yourself, but if you want to jump start your results, hire someone who knows what they're doing to do it for you.

3. Good old fashioned guerrilla marketing has not and will never become extinct. It has been our experience that the most successful businesses are those who layer on a guerrilla marketing strategy to whatever else they might be doing. There are hundreds of tactics from cross promoting with another business to neighborhood door hangers to tricks with signage that can increase foot traffic as much as 30%.

This takes more time than money. And, you probably already know some of the things you can do. It will take longer to drive sales if this is the only strategy you use.

Figuring out the right strategic mix and what message resonates best with your target audience can and will drive sales. One of our clients, a Sacramento sit down restaurant chain, saw a 24.5% increase in sales this January as a direct result of marketing. A recession is not the end of the world. Business is still out there. You just have to work a little more strategically to increase your share.

New Web Site for Filter Technology Ltd. Completed

We knew industrial air filtration would be a challenge, but we didn't know how big. After a number of obstacles on the client's part that could not be anticipated, we were recently able to complete an altogether new web site for Filter Technology Ltd. My hat goes off to Bob Hood, who was blindsided with a severe illness which created significant challenges during the developmental process. We are now happy to report that the site is complete, but more importantly, Bob is back to his old self, 100%.

Filter Technology is a company that designs, engineers and builds industrial air pollution control systems. You can visit the site at http://www.filtertechnologyltd.com/ . After having written much, and edited all of the copy for the site, I am now more knowledgeable about industrial air filtration that I ever thought I would be. Not that I know all that much about it. But, this is a shining example of what can be accomplished when the client supplies the knowledge and the agency puts it into words.

Bob is personally, one of the most authoritative experts in the country when it comes to high temperature filtration, using air to air head exchangers. You can see the page at www.filtertechnologyltd.com/products/high-temp-filtration/ . There are only two...maybe three others in the entire country who are as accomplished as Bob in the area of high temperature filtration.

Moreover, his business isn't restricted to the United State. He recently completed six process dust filters in Qatar. See www.filtertechnologyltd.com/products/process-dust-filters/ . More information is listed on the "Projects" page.

Consulting is an important part of Filter Technology's service, with a large portion of the business in bringing existing systems up to date. These days, many companies don't want to spend the money to completely replace their old systems, so the look to Bob to help them up-grade what they have. You can read more about it at www.filtertechnology.com/services-industrial-filtration/ .

We're pretty pleased with this new site, and so is Bob. He has already experienced an increase in visits and business activity as a direct result of launching his new web site.