Hint: it’s not what you think.
What’s the biggest mistake your business could be making during a recession? Drum roll, please…
Cutting back on marketing dollars. It’s true. The best time to spend more, not less, on marketing and advertising is when the economy is down. Fortunately for you, not many people are aware of this fact. Here are a few reasons why this secret is true and why you should utilize it to your full advantage.
1. History proves it
“Studies of the last six recessions have demonstrated that companies which do not cut back their advertising budgets achieve greater increases in profit than companies which do cut back”
–Ogilvy on Advertising, 1983
Time and time again, history shows us that the companies that spend more money on their marketing during a recession are the ones that come out on top when the economy turns.
Don’t believe me? Just ask Dell.
In the slump of the early 1990’s it increased its marketing by 346%, while their competitors cut theirs by 25-40%. By 1993 Dell had become one of the top five computer systems developers in the world.
Companies that spend money on their marketing during a recession win Click To Tweet
Or take a look at Apple, which boldly launched the iPod a mere six weeks after 9/11. As we all know, the iPod has been remarkably successful and now boasts over 70% of its market share.
And if we travel back in time all the way to the Great Depression, we find that Kellogg was in on this little secret as well. They doubled their marketing budget and aggressively increased radio advertising during our country’s worst economic downturn. Kellogg not only became the industry’s dominant leader, but remains so. So if you ask me, the proof is in the pudding.
2. You get a better ROI (Return on Investment)
“According to estimates, the value of well-branded companies is 70% greater than the value of their tangible assets”
–Business Week Global Brands Report
Not only does investing into your business’ brand increase its value over time, a good reason to spend on marketing now is because your money will go further.
Since less people are buying, those that supply advertising and marketing services are more likely to give you a good deal (notice I said good deal, not dirt cheap. Be wary of offers that seem too good to be true, because they often are. Remember, you still get what you pay for, even in a recession).
To the savvy business owner, this can be a great way to do more with less money, since once the economy turns everyone will rush in to market themselves again. As demand for marketing goes up, prices will go up along with it.
3. None of your competitors are doing it
“Firms that spent aggressively on advertising and marketing during a recessionary period outperformed firms that did not by almost 250 percent.”
–Report in an independent study by Dr. Kijewski
This is probably the best reason to start marketing now. While everyone else is either running for the hills or trying to bunker down and weather the storm, you have the opportunity to be the lone voice that catches your audience’s attention.
If you spend more time and money marketing than anyone else is, not only will you stand out to your customers, you will also come out ahead of the game when the economy finally does recover. Think about it. When everyone else starts scrambling to market themselves again, you will already be there, boasting high profits and new customers.
Are there any other reasons you can think of to market in a slow economy? Do you think that in order to make money, you must first spend money?