It might be a while before our economy can start crawling its way out of this COVID-19 hole. Unfortunately, many advertisers are beginning to panic. This week Marketing Week just released an update to their media spend survey that suggests that 86% of advertisers have decided or are considering delaying their marketing campaigns. This is up from 55% just three weeks ago. Only 14% say they are going ahead as planned.
This is precisely what advertisers shouldn’t be doing. Historically speaking, economic downturns are the ideal time to gain market share on your competitors if you have the fortitude to focus on the long game. In the pre-depression 1920s, Post was the category leader in the ready-to-eat cereal category. After the stock market crash in 1929, the cereal maker chose to weather the storm by significantly cutting its advertising budget. Conversely, their rival Kellogg’s chose to fill the quiet by doubling its advertising spend. Investing heavily in radio, the mass medium of the time, Kellogg’s was even bold enough to launch a new brand called Rice Krispies. On the backs of the “Snap, Crackle, Pop” guys, Kellogg’s profits grew by 30% and the company became the category leader; a position it still holds today.
Fast forward 40 or so year to the recession of 1973-75. This economic downturn was triggered by OPEC hiking oil prices. Unemployment topped 9%, the stock market crashed 48%, and the country plunged into the “energy crisis.” As a response to sky-high prices at the gas pump, the U.S. government issued its first fuel efficiency report which had the Toyota Corolla topping the list. The foreign car sales leader at the time, the Volkswagon Beetle, landed much further down the MPG list. As the recession stretched out over more than two years, Toyota stepped on the gas of their ad spend and zoomed past VW who played it safe and cut budgets.
More recently, Amazon sales grew by 28% in 2009 during the “great recession.” The tech company continued to innovate with new products during the slumping economy, most notably with new Kindle products which helped to grow market share. Christmas Day found more e-books on the Kindle than printed books under the tree.
The Marketing Week survey shows advertisers are still inclined to hunker down during a recession and cut back on advertising. when the real opportunity is to grab market share by maintaining or increasing ad budgets. And when the recession ends, these smart advertisers will enjoy a running start on the competition. If history is prolog, now is the time to jump in your Corolla with Snap, Crackle, and Pop and put the pedal to the metal on your advertising spend.