Dec 22, 2008

Debunking the myth

An article appeared from the AP this morning describing how my state, Utah, is considering cutting its advertising expenditure due to a budget shortfall. And Utah isn't alone. Whether it's state government or business, in times of recession the first thing CFOs often do is look at advertising and cut it. It looks good on an Excel spreadsheet. But advertising is crucial in slow times.

It makes sense. You have a slow season, so you need to get people in your door. How do you lure those customers in? You have to advertise. Once you cut your marketing, it's hard to get back to where you were. You disappear from the consumer's mind. You lose ability to influence your brand image. One of your competitors instead keeps advertising and gains market share as you start losing traction, sometimes to the point it can never again be recouped.

Keynesian economics works with businesses too. Those who advertise will remain in a much better situation after the recession is over than those who do not.

Its not just advertising, but research too. Research is at the heart of a company's ability to innovate. As with advertising, too many companies talk themselves into thinking that research is something it cannot afford. Yet part of the reason we are in the economic situation we are in is because the market dramatically evolved, while the policies that governed business remained as they have for half a century.

So in reality, a marketer shouldn't be asking themselves if they can afford to advertise or invest in research. The real question should be, "How can I afford not to?"