Web Presence Management and Optimization for Local Companies

Marketing Suffers During a Recession as Budgets are cut

08 Dec
2009

The recession that the United States is slowly coming out of hit the marketing budget for most companies really hard.  During a recession, it is the marketing budget that gets slashed to make way for other expenses which are deemed more relevant and important.  However, studies and our vast experience have shown that marketing is not one of the budgets that should be cut.

If you are a business owner who has cut, or who is thinking about cutting your marketing and advertising budget, you need to be familiar with the ABP/Meldrum and Fewsmith joint study, which was conducted during the 1970 recession.  It showed that “sales and profits can be maintained and increased in recession years, and in the years immediately following, by those who are willing to maintain an aggressive marketing posture…”  You also need to be familiar the follow up study that determined:  “Companies that did not cut advertising expenditures during the 1974-75 recession experienced higher sales and net income…”  The studies they conducted were against companies that cut their marketing budget and cut back on promotional efforts.

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Increase Advertising = Increase in Sales

There was also a study conducted after the 1981-1982 recession by McGraw-Hill’s Research Laboratory of Advertising Performance.  The report from the study revealed that B2B firms “that maintained or increased their advertising expenditures during the 1981-82 recession averaged significantly higher sales growth, both during the recession and for the three years thereafter, than those that eliminated or decreased advertising.”

Therefore, if you have decided to cut advertising, you are going against what studies and our experience have shown.  You may still be feeling the crunch from the latest contraction, but you need to find the money to put into marketing and perhaps cut elsewhere.  If you followed the trend and slashed marketing and advertising, you have given your competitors a leg up.  Aggressive and savvy business owners will have been increasing revenue and profits while you decide it is time to once again increase your budget.  They have been marketing and advertising their brand.  They have been in the public’s eye and they are the ones who will be remembered when there is more available spending cash.

Here are some more numbers if you still need to be convinced that you need to market and advertize.  There were 101 household name-brands compared during the 1989-1991 recession.  Among them were names that everyone is familiar with such as Jell-O, Crisco, Green Giant and Doritos.  These companies experienced a sales decrease of 26 to 64%.  However, Procter & Gamble, which then owned the company, increase Jif peanut butter’s  ad support and sales skyrocketed by as much as 57%.  Something similar happened to Kraft salad dressing, whose additional ad support saw sales go up by 70%.

It is common for small businesses to instinctively react and cut marketing and advertising so that profits will not suffer.  However, in a recession or downturn in the economy, it is the aggressive marketer and advertiser that profits.  You need to increase spending rather than slash the budget, market to your customers, start sponsoring, command premium prices by explaining the value message of your brand, introduce new products and, above all, draw on an Internet audience that is millions strong and growing.

That’s where SDInternetMarketing comes in to help you conduct your Internet marketing campaign.  SD Internet Marketing has the experience and knows the methods that will get your website noticed, increase your visitors and help your sales grow.  We stay current and up to date with the most recent market trends and studies.  As a business owner, you will have the time to take care of your sales, knowing that SDInternetMarketing.com will be taking care of everything else.

David
author

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