Data supports old saw about ad spend during recessions

March 6, 2009 by Dave Haynes

I’ve the argument before that companies should maintain or even increase their marketing spend during a recession, and come out the other end with a much stronger market position. 

But I haven’t seen a lot of data to back that up.

So here’s some …

Adrants has a post today about a McGraw-Hill study of some 600 businesses that found those who maintained or even upped their their ad spends during periods of recession saw higher sales growth during the recession and in the years that followed.

In fact, the study found those who maintained or increased their ad budgets experienced a 256 percent increase in sales compared to those who cut their budgets.

Another study found businesses that advertised during a recession saw their market share increase 2.5 times.

And if you think waiting until the recession is over is a smart thing to do, consider this; a third study revealed 80 percent of the businesses that waited until a post-recession economic expansion to advertise saw zero increase in market share. Which, of course, is obvious since everyone else began advertising again.

Sadly, not many companies take these facts to heart. Rather, they recoil, close the wallet and pray. Other realities come into play such as the indisputable realization that if there’s no budget, there’s no budget. And all the desire in the world to advertise during a recession isn’t going to change that sad fact.

There’s more on the subject on a blog called BrandTao, including the chart included here. And here’s a 1991 AllBusiness article that goes into detail.

And I did a post a while back using a nice presentation by The Economist that went into this subject, as well.