Cutting Your Marketing Back?
Risks and Reward Studies of Past Recessions
Firm Issues
By Bob Weiss
March 2009
Most firms will consider trimming their marketing budgets in 2009. Law firm marketers are telling them they should not, but that recommendation is tainted by self-interest. Is there any data firms can use to guide budgeting during the economic downturn?
Yes. We have located studies of every recession going back to 1920s. They discuss the risks and rewards of budget cutbacks and expansions during a recession. They are from respected sources, the Harvard Business Review and McGraw Hill among others.
All show the same results.business-to-business firms that maintained or increased their advertising expenditures during recessions over the past 90 years have averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. In the three years following the 1980-1981 recession, revenues of companies that were aggressive recession advertisers rose 256% over those that didn't keep up their advertising, according to McGraw Hill.
The studies track performance of major advertisers of business-to-business products and services. We have not been able to locate a study of professional services firms (possibly because lawyers, architects, CPAs, engineers and health care providers were not permitted to advertise and otherwise market until 1980.)
Links and cites of studies and white papers:
- http://hbswk.hbs.edu/item/5878.html
- Study conducted by Roland S. Vaile and published in the Harvard Business Review, April, 1927
- Study conducted by Buchen Advertising, Inc., 1949, 1954, 1958 and 1961 recessions
- Meldrum & Fewsmith, Inc., the American Business Press, 1970
- McGraw-Hill Research. Laboratory of Advertising Performance Report 5262 New York: McGraw-Hill, 1986
- Billett Consultancy and Taylor Nelson AGB: The Billett/AGB Report 1993
- . "Options and Opportunities for Consumer Businesses: Advertising During a Recession," The Center for Research & Development, October 1990.
- Garbett, Thomas. How to Build a Corporation's Identity and Project Its Image. Chapter 17: "Corporate Communications in a Recession." Lexington, Massachusetts: Lexington Books, D.C. Heath and Company, 1988.
- DDB Needham Worldwide. "Advertising in Recessionary Times," October 8, 1990.
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