The sad state of the economy has been the reason for many businesses choosing to cut back or eliminate advertising. If businesses are laying dozens of people off, changing business models and procedures, and cutting other costs of business, what chance does the marketing budget have? If there is one thing in the industry that is a constant, it is that in troubling economic times, you can always bet that the ad budget is the first to go.
Worse than this is that there are just as many businesses out there blaming the economy – not as a reason, but as an excuse. By this I mean that there are owners and VPs out there who justify their lack of ad spending by the downfall of the economy when they are clearly not suffering the hefty blows of such. They have either found an excuse not to spend money at a time when their competitors are not pounding the airwaves (temporarily) or they have errantly dug themselves so deep prior to the downfall, that now they are trying to catch back up. It is disconcerting when you see two shiny, new company cars in the parking lot & new executive furniture, but they’ve decided to lay off their part time employees and simply not advertise for the next six months to “see what happens.” This begs me to ask just how hard they are trying; not at advertising per say, but at business in general.
I know, I know. Easier said than done, and it’s not fair because it is different looking from the outside in. But if fairness is important, let’s discuss…
It’s disappointing, first of all, because there are plenty of businesses out there truly suffering, and it is flat out unfair to claim some sort of equal plight. Secondly, the savvy investor knows that a down economy is a great time to buy. The term “buying on the dips” is used commonly in financial investments. Is cultivating your audience and branding your company/products while a large percentage of your competition waits on the sidelines considered NOT an investment? Historically, people (and businesses) panic in economic dips. They stop spending, start saving and try to wait things out. The problem, however, is that the economic dips can drag on much longer than expected. The longer you stay off the airwaves, off of the vinyl signs, and away from your consumers’ attention, the more time that those large corporations have to bombard them with all of the reasons that put and keep them at the forefront of their minds. And when the customers do start spending again, little by little necessities and then luxuries, they will likely have already made up their minds of where they’re going to shop, where they are going to eat, and from whom they are buying their furniture or even insurance policies.
Larger corporations have to advertise in these dips. It does drive the economy, and it does stirs the drink for commerce. Consider this: when no one can afford to buy ad space, the demand for it reduces; when there is less demand from the media avenues, the supply becomes wide open and advertisers can name their price. Big brands like Pepsi, Kraft, and Home Depot can make use of so much unused or unsold ad space inventory that they can corner the market while everyone else is sleeping (saving).
When Chrysler spent so many millions on Super Bowl spots, people were enraged that they would spend so much bailout money on something as silly as marketing. But think about this – how many other vehicle ads were rolling before that? From the local level to the national level, car and truck ads were down in number. The reason that Chrysler went big on the biggest platform in marketing is that they could…and the others couldn’t. They introduced something new while most others (not all) sat things out. The Super Bowl is a sponsored, commercial event. We as viewers do not have to pay to view it other than our monthly cable, dish or other bill. The spots sell for such big coin that only the "bigs" can buy that space. So, simply put, if not them, then who? As someone who watched the Super Bowl these last couple of years, thanks Chrysler.
One approach to take is like drafting in Nascar. Let the big guys make the big moves, and follow in line on a scale that fits best. When the economy dips and begins to drag out, jump in when the demand is low and lock in for a longer media schedule at a lower price. You’ll be one of the few advertising in your industry within your market, and when things turn up and your competition decides to join the party the demand will be up so you can bet that their rates aren’t as low as the ones you locked up early on. Negotiate a lower rate for a longer commitment. If your competition is running crazy low sales and things, you can bet they can't continue that for long. They can only make 2% profit margins for only so long, so you have to be sure that they're commitment cannot be all that long.
Another reminder, you never have to advertise alone. If your business carries any product that you can partner with - a brand name or a larger entity or an affiliate - keep co-op advertising in mind. Co-op gets businesses through periods just like this. If you choose to wait on the sidelines and save money, that's fine. Whatever you do, don't blame your customers for going to your competition and don't use the excuse of the economy if it really doesn't apply. It's simply unfair to those businesses who are really being economized.
-Lance LaRue, Advertising & Creative Manager at Americom Marketing Ad Agency in Beaumont, Texas 2011
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