Greed is Good? The Facts about Advertising During an Economic Downturn

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To spend or not to spend during a downturn? That is the question. Surprising research shows businesses who advertise more during a recession grow an average of 2.5 times that of their competitors who cut spending during the same time period.

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Information Resource Juggle.com

"Be fearful when others are greedy, and be greedy when others are fearful”

While greed eventually ruined the fictional character Gordon Gecko in the popular 1985 film, 'Wall Street. The 1980-1985 study analyzed 600 business-to-business companies and concluded businesses who continued to advertise during the 1981-1982 recession enjoyed over 2.5 times the growth compared to competitors that decreased spending during the same time period.

Online reference website Juggle.com has subscribed to this approach by spending substantially more on marketing than ever before.

Juggle's aggressive advertising strategy appears to be working.

Studies show tough economic times present a growth opportunity for businesses willing to take invest in their brands. Stephanie Leffler, CEO of the reference website says this is precisely why she applies Forbes Billionaire Warren Buffet’s investment advice to advertising and marketing - "be fearful when others are greedy, and be greedy when others are fearful,” quotes Leffler.

Harvard Business School professor, John Quelch agrees, "This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times."

According to Leffler, "downturns create exceptional marketing opportunities for reduced prices...agile companies capable of making marketing decisions on short notice are rewarded a greater bang for their advertising budget".

Lower advertising rates afford businesses the opportunity to explore new advertising channels. For example, prior to the downturn, Juggle.com's marketing budget was spent entirely online.

From Leffler’s perspective, offline advertising was expensive and difficult to track ROI, "we have a hard time justifying offline advertising for our business. Online, we accurately account for every advertising dollar spent… for Juggle, until recently there was no compelling reason to market offline where our ability to track our return on investment is an inexact science”.

Juggle's approach to offline advertising changed when the economic downturn created offline opportunities too good to pass up.

An recent example of Juggle's offline promotional efforts includes the sponsorship of a Jay Robinson’s NASCAR Racing Team featuring drivers Kenny Wallace and Mark Green. The team competes in the NASCAR's Nationwide Series races.

While elaborating on Juggle.com's NASCAR Sponsorship, Leffler noted, “events like NASCAR's Nationwide Series provides a great opportunity for fans of America’s most popular spectator sport to learn about Juggle. We have been pleased with our investment".

Mounting evidence supports the idea to increase spending iwhen times are tough. Research firm Meldrum & Fewsmith, showed conclusively that advertising aggressively during recessions not only increases sales but increases profits as well. This fact has held true for all post-World War II recessions studied by The American Business Press starting in 1949.

Research agrees with Michael Douglas's character Gordon Gecko when applied to advertising during an economic downturn - "Greed is Good!"

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