I’m all for social media, but in a recession it pays to advertise!

This link will take you to just one of numerous articles and reports coming across my radar screen recently documenting the advantages of investing in marketing during economic downturns, especially in innovation and advertising.  Again and again history shows that those companies that have the wherewithal to prioritize long-term growth over the short-term bottom line and spend during recession come out the better for it at the other end.  They gain market share and are better positioned to further build their business as the economy enters a new period of expansion.

Continued investment in innovation means companies can widen the performance lead between their products and those of their competitors more quickly and significantly as those competitors cut back on R&D.  This is good for both the post-recessionary period, and the immediate present, since it means companies can strengthen the performance side of the value for money equation of their products precisely when consumers are re-evaluating their brand choices.

Investment in advertising means companies get more bang for their buck, as media gets less expensive in the wake of competitors’ budget cuts.  So the absolute out of pocket decreases at the same time share of voice increases.it-pays-to-advertise-sm3

Despite my own personal passion for social media and the great promise it holds for marketers, it cannot be denied that above-the-line communications still build business.  The data is there.  I’ve seen it with our clients.  When we invest in above-the-line spend, business increases — presuming we’ve got something worth saying — and the ROI’s are right.  In a recession, those ROI’s will be even better.

So while I wouldn’t deny, as many now say, that social media can be especially valuable in a recession because it helps companies  strengthen relationships with their existing consumer base, no one should think it can be a substitute for the broad scale competitive advantage above-the-line media can achieve for brands in recessionary times.

Especially in a recession, it pays to advertise!

3 Comments

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3 responses to “I’m all for social media, but in a recession it pays to advertise!

  1. Sue

    I agree with you…there is also plenty of evidence from both sides of the pond that some of advertising’s classics were born of a recession.

    What we all have to work out now is – given that people still need products, services and entertainment, recession or no recession – why your client’s product/service/entertainment is particularly relevant at this time.

  2. Uwe

    Guys,
    We’re all old enough to have seen more than one down, and up, in our career. Can we really sing that same song again, every time? Not just that, like every time before, we see sales departments hijacking brands advertising. Not just that, like never before, this crisis has been on the horizon for such a long time that everybody could’ve comfortably adapted their strategies to “recession mode” but almost nobody has (look only at the hardest hit industries automotive and financial services).
    BUT what the situation is actually overshadowing is that brand communication isn’t working the way it used to anymore, crisis or not. I see SUV advertising all over, and sales are imploding by 40 percent, in words: FORTY. How come we’re not surprised? Could a different, more brand-led approach to automakers above the line activities heal it? Or are there smarter ways to find SUV buyers in times of rapid social stigmatization?
    The funny thing about crises is, like with Leo Tostoy’s famous unhappy families, the’re all local. Not just in recessions but at all times, there are companies and industries in crisis, while others are in a gold rush. Maybe we just shouldn’t accept “recession” as an excuse for anything and keep working on how to integrate social media, your favourites Steve, in brand relations in meaningful ways.
    Sorry for this lengthy statement, your post and Sue’s comment opened my heart.

  3. Stephen Rothman

    Uwe my man! Any comment from you — lengthy or otherwise — is always welcome.

    Reading your post, I had to think of some newspaper advertising I recently saw for one of the German banks. I can’t remember the specific message, but it was pretty much the standard stuff about “our innovative approach,” “depth of knowledge” or something like that. I thought, are they crazy? The economy is imploding, people have lost all trust in the banking system and these guys continue to spout off their same-old tired, empty marketing jargon. Do they really think anyone is listening, or cares, or believes?

    How about a message that acknowledges how people are feeling? That says something honest for once? Like, “We know you don’t trust us anymore — and you’ve got every reason no to”? And then how about creating a community online for existing customers and prospects to share their questions, frustrations and anxieties? And have actual human beings from the bank engage with the community online?

    There’s a big role for social media, especially at times like these. Honestly, though, I think it’s more in the area of enabling existing and potential customers to engage with companies and marketers on a more meaningful, human level, to build or rebuild trust and relationships, rather than for marketers to find new ways to locate potential buyers. (Although this can be an objective as well.) And while I am certainly a proponent of the fact that brand communication isn’t working the way it used to — as evidenced by many past posts on this blog — I still believe it has a role to play within a broader communications effort that leverages traditional, digital and social media, promotion, PR, etc. — that is, all the various “colors” on the 360 palette, selected and calibrated, of course, to the specific context and objectives.

    The key point of this post was that if — and that’s a big if — you have the right message for these times, which, as Sue suggests, needs to be worked out, or you have a product innovation that is meaningful to your consumer base, especially in terms of creating value, now would be the time to investment-spend in traditional media behind that, as part of that larger whole, rather than cutting back. That’s because the ROI, precisely due to the fact that we are in a recession, can be especially high in the mid- to long-term. Advertising for SUVs or banks, unless there’s a significant change of message, I don’t think would qualify.

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