Should Businesses Market More in a Recession?

by Jennifer Beever

In January I facilitated a panel discussion on marketing during a recession in my ProVisors Distribution and Manufacturing affinity group. As we prepared for the panel discussion, we looked for studies on what works for marketing in a recession. One of the panelists, Brian Hemsworth, President of ad agency Newman Grace, found some research that suggested that increased investment in marketing during a recession leads to business growth once the recession ends. We had a terrific panel discussion (other panelists included Don Spector, President of ad agency The Next Level Marketing & Creative, PR and Marketing Communications expert Robert Wittenberg of Business Communications Strategies), and the meeting attendees – all professional service providers who work with manufacturers and distributors, walked away with some statistics and ideas for their own and their clients’ businesses.

One study we sited during the panel discussion, conducted by Gary Lilien and Arvind Rangaswamy of Penn State’s Smeal College of Business and published in the International Journal for Research in Marketing, showed that businesses that increased marketing in a recession grew more than those that didn’t. Businesses with a marketing focus had better brand recognition, product differentiation, more focused communications with targeted audiences and better service.

A second study that was sited was from the American Association of Advertising Agencies. This study showed that an increase in ad spending of 28-80% during a recession grows market share seven times faster once the economy expands. A modest increase in ad spend (less than 28%) during recession only grows marketing two times faster once the economy expands. I must say I’m suspect when an association puts forth study results that promote their members’ business – the Association of American Advertising Agencies puts out a study that shows businesses should advertise more…! In addition, buying behavior is clearly changing – business buyers place less trust in ads that are pushed on them than on referrals and testimonials from their peers and from industry experts.

Businesses don’t necessarily have to spend more to increase marketing, especially with new Internet technologies that have transformed marketing in the last 12 years. In a previous post, Technology Marketers Adopt Web 2.0 Earlier, I wrote about a survey of CMOs by the Chief Marketing Officer Council that shows technology CMOs plan to reduce marketing spend in 2009 and focus more on customer advocacy. Investing in customer advocacy means investing in Web 2.0 tactics like blogging, Twitter, Facebook and LinkedIn. If a business invests in Web 2.0 to promote word of mouth marketing (pull marketing), rather than increasing their ad spend (push marketing), they will get better results with today’s buyer.

Increasing awareness of your company, products and services in a recession makes sense. Your competitors may have slashed their marketing budgets, laid off marketing staff and are hunkering down to wait out the recession. Progressive businesses, on the other hand, invest in and innovate with new technologies and methods of reaching target audiences. That doesn’t necessarily mean increased marketing spend. It could even result in a decrease in marketing expense.


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