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04/25/2006: "Should you cut back on your advertising and marketing during a recession?"

Many, perhaps most, small business people cut back on advertising during bad economic times. That's just the opposite of what they should do.

A study published in Business News Week, 12/4/87 indicates the exact opposite. Agency Ogilvy & Mather and the U.S.-based Strategic Planning Institute found a clear link between increased spending on advertising and increased market share. The study showed that companies spending “much more” on advertising than their leading competitors as a percentage of actual or projected sales, captured 32% to 40% of the market...companies that spent about the same as their rivals gained a 23% market share, and those spending “much less” had to be content with less than 15% of the market. Market share, in turn, has a dramatic effect on profitability. Those companies with greater than 40% enjoy an average return on investment of 41%, while those with shares under 10% return profits around 9%.” By effectively marketing during a recession, while your competition cuts back, you can capture a larger piece of a shrinking pie...and when the economy turns around, you find yourself in an incredibly strong position.

David Ogilvy said . . .

If you're smart, you'll increase your budget during bad economic times. That suggestion was made to me by the late Cecil Hoge of Harrison Hoge Industries and author of The Electronic Marketing Manual. Good advice.