A history of successful advertising during recessions

The economic impact of the COVID-19 outbreak can be frightening for advertising and marketing professionals from any business. Uncertainty can make it easy to stop any spending that doesn’t have an immediate return on investment.

Advertising is a long game meant to increase awareness and interest in your brand and to drive direct sales. But the problem right now, is that those direct sales have slowed due to citizens losing their jobs or simply staying at home. 

Our country has experienced similar economic crises before, and businesses can learn valuable advertising lessons from that past. You might already be familiar with the saying “when times are good, you should advertise. When times are bad, you MUST advertise.” But let’s look at some historical examples of that saying holding true.

Advertising during the Great Depression

The most obvious example to start with is the Great Depression of the 1920’s, in which the cereal companies Kellogg and Post were battling for market domination.

When the depression hit, Post cut back expenses on advertising and took the safe route of saving money in the short term. Understandably, Post wanted to preserve what it had, rather than invest in the inevitable economic resurgence.

On the other hand, Kellogg doubled its ad budget, expanded into radio advertising, and heavily promoted its new cereal, Rice Krispies. In the end, Kellogg ended up increasing profits 33% by 1933 and today remains the industry’s top dog.

Being centered on a viral outbreak, the crisis of our time has some key differences worth acknowledging. In the Post vs. Kellogg example, Americans weren’t uncomfortable going out to buy cereal from a health standpoint. People still needed breakfast, and had no reason to avoid buying it from stores. But they did have to make a careful financial decision on which brand to spend their money on.

In a similar sense, consumers today have to decide what brand is worth supporting with their at-risk income and health. And when it comes time to venture back out of our homes, when the viral threat has faded, you want to be top of mind.

The Recession of 1981-1982

As the years went on, and a new recession came along, businesses looked to the past to learn from Post’s mistake. Data from the early 1980’s recession shows this in great numbers.

Source – McGraw-Hill Research

Research group McGraw-Hill questioned over 600 businesses after this recession to compare strategies and ROI. The data showed that businesses who continued to advertise hit a 256% growth over competitors who cut ad spending.

The key takeaway here, which applies to any time of economic struggle, is that you need to capitalize on the lack of advertising coming from your competition. Fill the space that you normally would have to fight for.

While maintaining a respectful image with your audience is important during hard times, that cannot be an excuse to cut promotional dollars. Be mindful of the world around you, as you advertise your message, but push that message harder than you have before.

Fast food in the 1990 recession

Good examples of successful advertising pushes during a recession lie in the quick-service restaurant industry. A dominant player in this market made key mistakes during this time that led to the rise of certain brands that remain powerful today.

Food chains Taco Bell and Pizza Hut took advantage of McDonald’s decision to cut ad spend during this time. As a result, Pizza Hut’s revenue went up 61% and Taco Bell improved by 40%. This is all due to the fact that these chains kept up their promotional efforts, while their biggest competitor failed to do the same.

This shows that surviving an economic recession isn’t just about having the deepest pockets. If the weaker brands (at that time) had the money to push advertisements so hard, surely McDonalds could have spent even more and promoted even harder. But Ronald McDonald’s failure comes from poor decision making. 

The Great Recession of 2008

Jumping ahead to much more recent memory, we can also learn from businesses’ reaction to the last large economic downturn. After this crash, newspaper advertising spend saw a 27% decrease, with a 22% decrease in radio ads, 18% in magazine, 11% in TV and 5% in online ads. As a whole the advertising market declined by 13%.

Amazon burst onto the scene during these years and went on to become an industry leader in technology services. The company released and confidently advertised new kindle e-reader products.

Amazon advertised these products as an affordable way to read new books, which was a smart play during a time when people wanted to save money. This resulted in Amazon’s sales growing by 28% in 2009. In fact, during the holiday season of that year, customers bought more e-books from Amazon than printed books. In 2020, this fact wouldn’t be surprising. But Amazon built up the digital reading market by building up this platform when people needed it.

Keep advertising when everyone else stops

The coronavirus pandemic is forcing us to turn our attention away from our peers, in an effort to socially distance. So it’s naturally a perfect time to capture the attention of audiences who are glued to TVs, mobile devices, and media of any kind. 

Whether you’re building your brand for the upcoming economic resurgence, or taking advantage of the unique at-home lifestyle, don’t stop advertising. 

To learn more about building an advertising strategy to carry you through the COVID-19 crisis contact us today.