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Do Profits Come Easier During Recessions?
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In April 1927, the HarvardBusiness Review foundcompanies that advertised mostduring recessions had the biggestsales increases.
Companies that had
higher sales and
net income during
the recession of
1974-75 didn’t
touch ad budgets.
What’s more, they
also beat non-
advertisers in the
two years after the
recession ended.
According to McGraw-Hill,companies that increased ad
budgets during the 1981 recessiontrounced competitors not justduring the downturn, but for
three years following.
Kellogg pushed their
ads through the Great
Depression. Post
didn’t. Guess who
dominated the cereal
market for the next
50 years. Can you say
Corn Flakes?
Stanley Tools
launched its
biggest ad campaign
during the 1974
recession. Their
consumer product
division took off.
They grew at twice
the rate of
competitors every
year thereafter.
Chevy pushed car sales in 1975.Ford scaled back by 14%, afraid of higher gasoline prices.
Chevy picked up 2% of the auto market. It took Ford five years to regain the lost ground.
In recessions of 1949, ’54, ’58, and ’61, companies tracked for adspending cutbacks saw sales and profits fall off.Those who kept ad budgets, saw profits increase… and kept an edge inthe years that followed.
Consumer
spending has
increased during
every post- WW II
recession,
according to The
American
Association of
Advertising
Agencies.
Remember the'01 Recession?
Coca Cola increased their worldwide marketingbudget $350 million for 2001. Net income was up22%. IBM increased ad budgets 17% in the springof that year. Their sales jumped 8.9%.
When recessions hit, mental real estate opens up. A lot of yourcompetitors scale back their marketing efforts because they’rescared.
Some companies go out of business. Competing marketingmessages grow quiet. However, people still need solutions. Andthey’re still willing to buy.
Since the last recession, a lot of new people have joined the ranksof the marketing trade. Most of them are green, and they'relearning everything from scratch… without the “recessionwisdom.” Do you think it will be tough to beat them with head-to-head promos, ads, collateral and campaigns?
Here’s the big take-away.
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