Many companies view advertising as an expense, rather than an investment. Certainly, advertising is not always a fixed cost or a capital expenditure, but that does not mean that it is not an investment. The dollars a business spends to build success must be viewed as an investment, because without these expenditures, the business will not grow. Companies that cut back on advertising during recessions and/or recoveries historically experience little to no sales growth. This proves that, without growth, a company has only a minimal chance of success—and of short- or long-term profitability.
Many companies make the mistake of ignoring, discounting, or not believing the foregoing; almost all of them regret making that mistake. Why? Because, when money is tight and/or people are worried about their job security, they pay closer attention to what they spend. It might seem that advertising would be more important when people spend more freely, but actually that is not the case. Sure, in good times, impulse purchases might increase, but that is more about in-store merchandising and online/catalog presentation than it is about advertising. Simply put, effective advertising is even more essential in bad times than it is in good times.
Advertising as a Source of Consumer Education
When consumers are more careful about how they spend their money, they pay closer attention to what they need and want—and to whether what they want is an indulgence or a true essential. Of course, effective advertising makes consumers believe that mere indulgences are true essentials, but when money is tight, they are less likely to be enticed into making an immediate purchase simply because they are less likely to spend. Advertising in a soft economy needs to focus on quality and reflect consumers’ concerns because, when they have to be careful about what they spend, they pay closer attention. To put this another way, consumers focus more on their search for quality products, services, information, etc., when they have to watch what they spend. They use advertising as a way to educate themselves about products, services, information, etc. They feel more in control of their spending when they believe that they are informed consumers.
Brand Loyalty – Capturing the Informed Consumer via Advertising
Regardless of business size or status—large, midsize, small, or start-up—a soft economy is the ideal time to initiate or revitalize the company advertising program. In addition, many other companies might feel that advertising is a good place to trim their budgets, so establishing and/or increasing advertising presence can offer a unique opportunity to stay ahead of the competition. As consumers do their advertising-oriented research prior to buying, they can only learn about the products, services, etc., that are advertised. Companies that make the most of advertising during a soft economy will capture the consumers trying to stay informed. With a good brand identity built into the company’s advertising, the soft economy can lead to short- and long-term customers that the company might not otherwise have had. Brand identity can lead to brand loyalty, especially during a soft economy—but without advertising, that loyalty will be harder to capture.
Another important concept to remember is time. From a strict economic standpoint, recessions are usually short. Consumers who tighten their belts in bad times are typically eager to buy when the recession is over—and, again, because recessions usually don’t last for very long (in terms of economic trends), those same consumers are likely to remember what they discovered during their research of upcoming purchases/expenses. Companies that invest in advertising during these times become part of that research—so advertising dollars can effectively lead to increased exposure, competitive advantage, solidified brand identity, and stronger brand loyalty.
Given all that, it is just smart business to develop an advertising program during a soft economy. Smart, innovative companies use advertising to invest in their present and future success because they know that informed/educated consumers are more likely to become loyal customers—present and future.
Investing in advertising is strong, smart business—that is just the bottom line!
WRITTEN BY: Lisa Drucker, Principal Writer & Content Provider, lisadrucker.com; Content Team Leader, Synergy Publishing, LLC
SOURCES: US Department of Commerce; allbusiness.com
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