RAB Research Archive

Businesses That Continue Advertising in Crisis Grow



Last week, we shared a tip: The Six Lessons Learned. We explored what we learned when we initially dealt with the impact of the pandemic. In recent weeks, those eerie questions about shutdowns, lockdowns and closures are surfacing again as we grapple with a new variant of COVID-19.

The evidence is clear: businesses that continue to advertise during a crisis grow. This time we can be proactive with our clients and share this information with them before they make decisions instead of playing catch-up after the cancellations. This is where research and stories can be valuable.

Forbes magazine gave us a history lesson on the impact of advertising in crisis in their article: When A Recession Comes, Don’t Stop Advertising. Dry cereal: In the 1920s, Post was the category leader in the ready-to-eat cereal category. During the Great Depression, Post cut back its advertising budget significantly and rival Kellogg’s doubled its advertising spend, investing heavily in radio and introducing a new cereal called Rice Krispies, featuring “Snap,” “Crackle” and “Pop.” Kellogg’s profits grew by 30%, and the company became the category leader, a position it has maintained for decades.

Quick-service restaurants: In the 1990-91 recession, Pizza Hut and Taco Bell took advantage of McDonald’s decision to drop their advertising and promotion budget. As a result, Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28%.

Technology: 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. In a first, on Christmas Day 2009, Amazon customers bought more e-books than printed books. As a result, in the minds of consumers, Amazon became an innovative company by introducing a lower-cost alternative to cash-strapped consumers.

It's a natural and seemingly logical thought process for businesses to cut back on advertising when times are tough. The evidence and research suggest those that went against conventional logic and continued to advertise, and in some cases doubled down, fared much better than those who didn’t.

In the spirit of “what we learned the first time,” have your sales team share stories of local clients who continued to advertise and what happened as a result.

The best quote about advertising in a recession that I’ve ever read comes from Sam Walton, founder of Walmart. When asked how he felt about the recession, he said: “I thought about it and decided not to participate.”

Advertising is information, and people are starved for relevant recent information that is beneficial for their lives. During a crisis, they are even more dependent on this information. RAB members have access to massive amounts of research, stories and case studies, all organized for your convenience on our Business Accelerated page. You might also consider our webinars on demand. They make great sales meetings and provide thought-provoking information to help deal with the uncertainty.

Jeff Schmidt is the SVP of Professional Development. You can reach him at Jeff.Schmidt@RAB.com. You can also connect with him on Twitter and LinkedIn.

Source: Jeff Schmidt, RAB





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