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Why Businesses Should Maintain Ad Initiatives During an Economic Downturn

why you should maintain ad initiatives during a recession

Maintaining ad initiatives is especially important during economic downturns.

The impact of the COVID-19 pandemic has been monumental on businesses, both large and small. Because of these effects, talk of an economic recession has been increasing. Whenever a recession may come is still unknown, but a business slowdown is inevitable. Often, when a recession is feared, businesses cut back in various areas, including their ad spending. However, there have been studies going back nearly 100 years, which indicate that maintaining or even increasing ad budgets during a weaker economy can be an advantage to businesses. There has been evidence that maintaining or even increasing ad initiatives during recessions can benefit a business much more than eliminating ad costs; read on to learn what those benefits may be.

Cutting Back Completely Can Mean Long-Term Consequences

While the instinct to pause ad initiatives or suspend digital advertising is certainly understandable, that decision may have long-term consequences for your company. Choosing to cancel all marketing initiatives may save money, but it will mean that you have no market presence and are essentially dropping out as a competitor. This disappearance can set you back three to six months in profit, which can be extra troublesome when the time comes to make up the losses incurred during the pandemic, and you see an uptick in business. 

How to Continue Marketing While Saving Money

Instead of entirely canceling all marketing initiatives, you could consider a small reduction in your ad campaign. This can still save you significant funds because advertisers may be lowering budgets, and the market competition may be thinning out. If you have even a small presence in a less competitive market, you will make an impression. A reasonably-sized digital marketing initiative will help you maintain an online presence and continue communications, so your business stays front of mind for consumers now and in the future. Some brands have even taken recessions as an opportunity to debut new products in a less crowded market. 

Real-World Examples

There have been a few notable examples of companies benefiting from maintaining or increasing ad initiatives in past economic recessions. 

The Dry Cereal Champions

In the 1920s, Post cereal was the leader in the ready-to-eat cereal market. However, during the Great Depression of the 1930s, Post cut back its advertising budget significantly while its rival Kellogg’s doubled its advertising costs and introduced a new cereal called Rice Krispies. As a result, Kellogg’s profits grew by 30%, and the company became a leader in its market for decades. 

Toyota vs. Honda

In the recession of 1973-1975, the Toyota Corolla and Honda Civic were the most fuel-efficient cars on the market. Because Toyota was experiencing strong sales when the economic downturn hit, they were tempted to drop their advertising budget. However, they resisted and maintained their long-term ad strategy. In doing so, Toyota surpassed Volkswagen as the top imported carmaker in the U.S. by 1976. 

If you resist the urge to cancel all ad initiatives at the onset of an economic recession, you may see long-term benefits to your company that could carry you through and past this challenging period. 

Contact Adventure Web Interactive Today

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