It’s not news that the United States economy, as well as the global economy, is in serious turmoil. The US government is pondering the largest bailout in history and the unemployment rate continues to climb. In such an unsure and volatile time, does it make sense for your company to cutback or stop advertising to decrease your expenses?
Initially, this may seem like the best course of action. However, history has shown that companies can receive great value by advertising and continuing to innovate during a down economy.
Here are a few reasons why:
Fewer advertisers mean better rates
At Media Works we have seen this firsthand. When other advertisers stop or reduce their spending, it opens up inventory and reduces rates. This allows clients to get even more value for their advertising dollar.
Instead of the typical yearly increase in media costs, we have seen at least a 10-15% drop in ad rates. For certain forms of media, the reductions are even larger. Our clients’ ad dollars are going farther, giving them increased exposure for the same spend. This savings on current media buys also allows companies to invest in testing new media or technologies.
An opportunity to gain market share
In addition to getting better rates, if your competitors aren’t advertising your company has a huge opportunity to increase market share. Consumers have not stopped spending money all together and if anything, are looking for better deals and new products that fit their lifestyles. An economic downturn offers the chance to connect with consumers that may not have considered your product or company previously.
Additionally, “a McGraw-Hill Research study looking at 600 companies from 1980 to 1985 found that those businesses which chose to maintain or raise their level of advertising expenditures during the 1981 and 1982 recession had significantly higher sales after the economy recovered. Specifically, companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise.”
Examples of brands doing this well
Of course it is important for your advertising to be conscious of the economic situation. It can be challenging now to promote a product, especially one that requires a large financial commitment. But some companies lately have done a good job tying their advertising into the economy and modifying offers to fit the needs of today’s consumer. Here are a few we found especially effective.
The first time I saw Hyundai’s Assurance spot, I was struck by the brilliance and simplicity of the offer. If you lose your income within the first year of buying a new Hyundai, you can return the car with no negative affect on your credit. This does so much to mitigate people’s fears of being strapped with a monthly car payment if they lose their job. At a time when the future of the Big Three American companies is unsure, Hyundai is making a bold move to take another piece of their market share.
Discount retailers like Wal-Mart and Target have always stressed value and low prices. Now, more than ever, those message are resonating with customers. Target’s most recent commercials focus on price in a way they never have in the past.
I couldn’t resist mentioning Snuggies here. Whether you love or hate the direct-response, admittedly-cheesy ad, you can’t deny the success of Snuggies in the last few months. They have reportedly sold over 4 million units which equates to nearly $40 million in retail sales. Snuggies may have been a success without the recession, but low media rates have allowed them to inundate the airwaves and become a part of pop culture. And at only $19.95 for two Snuggies and two book lights, it’s not a bad deal right now.