In light of the COVID-19 pandemic, people are starting to talk about the economic aftermath this may have on our society. As of April 2020, the long-term consequences are still unknown, but managers need to start planning for every business scenario. What would a recession mean to your advertising strategy? Before we answer this question, let’s take a look at what happened to the advertising industry after the 2008 stock market crash. The numbers saw a significant drop, with newspaper advertising spend in the US falling by 27%; radio, 22%; magazine, 18%; outdoor, 11%; TV, 5% and online, 2%. The entire ad market declined by 13%. But is decreasing or eliminating your advertising budget a smart move during a recession?
One study dating as back as 1920 show that companies who continued to advertise during an economic downturn were 20% ahead of where they had been before the recession. In contrast, companies who reduced advertising were still in the recession, 7% below their 1920 levels. Further building on this idea, a study by McGraw-Hill analyzed 600 companies and found that business-to-business companies that maintained or increased their advertising budget during the 1981-1982 recession saw significantly higher average sales growth both during and after the recession compared to those who reduced or eliminated their advertising. This means that decreasing or eliminating your advertising budget during a recession may actually harm your strategy in the long-term.
Why should you maintain car and truck wrap advertising during a recession?
Here are a few reasons why you should continue car wrap advertising during a recession:
- When competitors reduce their number of advertising vehicles, this can result in less “noise”, making it easier for your brand to stand out on the road
- When customers see your vehicles roaming around the city, this builds the impression of resilience and economic stability
- Advertising costs drop during a recession, creating an opportunity to wrap more vehicles in your fleet or rebrand existing ones
As any difficult time, this too will pass and as the old saying goes, “When times are good you should advertise. When times are bad you must advertise.