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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