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Author: Tom Farrell

Advertising in times of recession: A question of value

Updated Friday, 13th March 2009

Tom Farrell looks at why advertising spend shouldn't necessarily be cut in a recession

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In times of economic crisis, repetitive negative media reporting can dampen consumer demand and seriously erode business confidence. As with other discretionary costs many businesses begin to question the value of their advertising. The Lord Leverhulme cliché re-emerges:

"I know half of my advertising spend is wasted but which half’. In recession should advertising expenditure be curtailed or aggressively used to boost demand?"

Current declining media revenues indicate companies are cutting back as recession bites, arguably putting sales and industry jobs at risk. Advertising spends can be an indicator of how confidently marketers believe in their brands. Weighing up product, targeting and competitive ramifications, they must decide whether to pull back spending or push harder.

At risk are market share, visibility, customer loyalty, even shareholder confidence in the organisation. Short term battening down hatches, hoping it all will blow over, can be costly. However, studies of previous recessions suggest that continued advertising spending increased sales, market share and brand reputation in the long term.

Advertising plays an important catalytic role in building brands, sales, jobs and funding media. Its power lies in accentuating the positive, now a scarce commodity. Nonetheless the ad industry is often charged with creating false needs and overconsumption, perhaps questioning the value of advertising in terms of its potential to be both a wasteful activity and efficient economic force.

The demise of household name retail stores, banks and traditional media may reflect the evolutionary reality of the market and changing consumer expectations. Advertising insights and creativity remain as essential as ever to reflect the zeitgeist. Innovative new digital technologies, social networks and so forth make advertising effectiveness increasingly measurable, arguably less wasteful.

The sad fact is recent irresponsible and unethical business practice seems to be institutionalised. The culture of steroidal market growth, overproduction, overconsumption, overpayment, over looking; has inevitable consequences and externalities: (credit crunch, fuel crises, global warming, pollution, stress, obesity, etc).

Eventually everybody hurts in the interconnected age.

Eventually everybody hurts in the interconnected age. Social responsibility and sustainability are not fashion items, practitioners must reflect on whose interests are being served. Moral muteness and myopia are no longer excusable; clients and agents need to walk the talk. Advertising has an instrumental role to play but must make nobler moves not try to get ‘more bangs for their buck’ using cheap, deceptive, misleading or offensive tactics.

The current global belt tightening echoes the World War era in the UK when advertising focused on public morale, resource management and regulation of behaviour. Brands survived by adopting utilitarian, anti-waste, less frivolous appeals.

It may be that a return the organic wartime marketing diet could yield sustainable green shoots where ‘less is more’. It may be naive to expect a paradigm shift to a lean yet agile responsibility culture where business uses advertising to promote and share ethical values over sharevalues.

Perhaps the big challenge of the recession is not the value of advertising but the values of advertising. Responsible marketers and advertisers are conscious of consequences, doing things right and doing the right things.

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