Advertising In A Recession: Yes or No?

It's "Recession Week" here at TAC. I've asked some of my colleagues to give us their thoughts about advertising during a recession. Today's guest post is by Sharon Krinsky.

Whenever there’s a serious economic downturn there are always two knee-jerk reactions:

1. Advertisers cut their ad budgets.
2. Ad executives say they shouldn’t.

Who’s right? Well, that depends on who you are.

In order to have an intelligent advertising strategy during a recessionary period, you need to understand that there are basically three kinds of businesses:

• Businesses for whom advertising is essential.
• Businesses for whom advertising is discretionary.
• Businesses that are somewhere in the middle.

Today we'll take an overview of each type of business and the advertising issues it faces. Tomorrow we'll get into specifics.

Businesses for whom advertising is essential.

For some companies, advertising is oxygen. With it, they grow. Without it, they die.

These businesses tend to be in categories that are consumer-oriented and highly responsive to marketing activity. They include fast food, retail, consumer packaged goods, and automotive.

If you are in one of these categories, or a similar category, trying to save money by dramatically cutting advertising will do more harm than good. If you have a successful advertising campaign in progress, you should stay the course in terms of spending and message.

However, if you're in a category like this and your current advertising efforts are not showing success, you need to keep advertising but change your strategy. How?

Create advertising that is focused on changing customer behavior, not customer attitudes.

A lot more about this tomorrow.

Businesses for whom advertising is discretionary.

There are some types of businesses that are not highly responsive to advertising: life insurance, wine, and serious technology are a few examples.

These businesses generally use advertising for secondary purposes like influencing investors, impressing the trade, softening you up for the sales call or, frankly, assuaging corporate egos (hard to believe, huh?) Advertising may be useful, but is not essential to the business.

If you are in one of these categories, and revenue is starting to sag, saving advertising dollars is a good idea. If you go dark for a few months the only ones who’ll notice will be your ad agency.

Businesses that are somewhere in the middle.

Most businesses are somewhere in the middle. Advertising is sometimes successful, sometimes essential, and sometimes unnecessary or ineffectual.

If you are in one of these businesses you can do yourself a lot of good, or a lot of harm. It all depends on whether you're using creative and media strategies that are appropriate for the times. What you did last year may not be a good model and needs to be reconsidered with a sober eye.

To get some specific ideas on how to build your creative and media strategies, part 2 is here.

Sharon is president of Hoffman/Lewis. You can reach her at skrinsky@hoffmanlewis.com

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