Amidst a global pandemic and financial uncertainty, tensions are currently running high for nearly everybody. As the stock market continues to fluctuate wildly and news updates come in by the minute, many business owners are bracing themselves for the potential of hard economic times.
As the threat of falling sales approaches, marketing is often one of the first budget items to be downsized, whether or not that is the best step for the organization. This is evidenced by marketing behaviors exhibited after the 2008 recession, where U.S. ad spending dropped by a full 13 percent.
After all, if no one is buying, what is the point in marketing products? This mindset is a grim mistake.
This assertion of miscalculation is also borne out by the aforementioned 2008 data as online advertising only decreased by a marginal two percent. The reason for the comparatively minor decrease is that during tough times, it is actually wise for brands to invest in digital marketing–particularly with the circumstances that are playing out at this moment in time. But before we dive into how today’s situation can benefit eCommerce retailers in the long term, let’s take a moment to study the history books to understand that marketing amidst financial uncertainty is not an option for retailers, but a prerequisite for business growth.
The fact of the matter is that when the market contracts, so do many sellers’ marketing budgets. However, those who push against the stream and take bold steps in the face of uncertainty are the ones that reap the most significant rewards. Taking a cursory look at advertising in a recession over the past 100 years, it is clear that those who did not cut their ad budget, but either stayed the course or increased their budgets, came out the other end in much better shape than those who recoiled into relative safety.
For instance, during the recession of 1923, advertising executive Roland Vaile tracked 200 different companies. In 1927, he reported that those who had continued their advertising efforts were 20 percent ahead of where they were pre-recession. Alternatively, those who contracted were down seven percent.
Similarly, in the midst of the Great Depression, Kellogg’s displayed the virtue of strength, doubling its advertising budget. Meanwhile, the cereal market leader of the time, Post, cut its marketing efforts. As a result of the dynamic, Kellogg’s grew profits by 30 percent and became the market leader for many decades.
In mid-century, as the Advertising Specialty Institute reports:
“Buchen Advertising tracked advertising dollars vs. sales trends for the recessions of 1949, 1954, 1958 and 1961. They found that sales and profits dropped at companies that cut back on advertising and that after the recession had ended, those same companies lagged behind the ones that maintained their ad budgets.”
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