Why It’s Crucial to Keep Advertising During a Recession: A Letter to Our Clients

During the last recession 12 years ago, some businesses thrived, emerging as market leaders two short years later. Unfortunately, some businesses died. And some meandered on—losing market share, laying off employees, shrinking, never to fully recover.

What was the difference between the businesses that did well in the face of adversity and later grew market share? The short answer is that they got creative and they never stopped investing in themselves.

Colorado Restaurant Gets Creative

Here’s an example featuring a 10-year-old, multi-location restaurant business in Colorado. Facing a large decline in sales due to Coronavirus fears and the governor shutting down all in-person dining, the owner got creative. Noticing a shortage of meat, bread, and other consumables in every grocery store, he came up with a plan to continue serving his customers, just in a different way. He used his relationship with his suppliers to put together a meat package, bread package, veggie package, and a fish package. He then marketed those pre-packed, fresh grocery bundles on various social media platforms with overwhelming success. His regular clientele and restaurant advocates even began advertising for him, spreading the word and sharing his posts.

He’s going to make it out of this current situation just fine, and he’ll likely make some new customers in the process. Folks, he just got creative and never stopped advertising. During uncertain or declining economic times, advertisers’ first instinct is to contract, slow-down, stop advertising altogether, stopping the flow of new leads coming in.

There is a fear that the economic slowdown will last forever.

But it won’t.

So what should you do?

  1. Invest in your own business by continuing digital advertising and marketing
  2. Improve your digital footprint and communication strategies
  3. Take a look at your website and make any improvements you can

A Look at The Facts

The chart below shows that the average recovery period for a market decline of more than 20% is about 400 days. That’s just over a year. Since it is an average, some market declines lasted longer and others were shorter. But they always recovered.

Chart showing market downturns from 1950 to 2019 using Standard & Poor's 500 Composite Index.

There are dozens of case studies of major brands who increased advertising during a downturn or uncertain times. A simple Google search will reveal how brands like Kellogg’s improved profits 30% during The Great Depression by increasing advertising and overtaking rival Post Cereal for decades to come.

In the 1990-1991 recession, McDonald's made a decision to stop advertising all together. Pizza Hut and Taco Bell capitalized on this by rolling out massive and innovative ad campaigns.

The results?

  • McDonald's sales decreased by 28%
  • Pizza Hut sales increased by 61%
  • Taco Bell Sales increased by 40%

Again, long-term winners continued to invest in themselves, increased advertising, and got creative.

It’s a great time to be part of the online conversation, as internet traffic has surged during the COVID-19 outbreak. Many companies may learn from this experience that employees can work just as efficiently from home, meaning that surge will stick. Internet use is actually peaking in the middle of the workday, creating a great opportunity for B2B marketers.

By the way, it’s cheaper to advertise during uncertain times, because your competitors might not see the light. Less ad competition (think Google bids) means less expensive ads for your business. Your bang for the buck becomes greater and the lighter competition means there is a better chance you can reach your target audience.

If you need help navigating today’s waters, getting creative, rebuilding your digital presence or maximizing advertising spend and generating a solid ROI, contact Bayshore Solutions today.

Eric Cadman, VP

Bayshore Solutions