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Recession Presents Bull Market For Advertising

Competition, not politicians, will save economy

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In uncertain—well, frightening—economic times it stands to reason that businesses would be looking to trim their budgets where they can. Some think that means advertising will naturally suffer. On the contrary, when is there a better time to seek new customers?

For online publishers, one of the early alarms was set off by Gawker. Last Friday it was announced Gawker would layoff over half the staff at Valleywag in anticipation of advertiser cutbacks. It would be easy to expand that concern to the rest of the advertiser/publisher world, but Valleywag and Gawker had their unique circumstances. Valleywag often read like a Great Gatsby account of the roaring Twenties, where the excesses and exploits of the rich and tech-famous were chronicled and ridiculed. And that works just fine in the Salad Days, but eventually the pendulum swings back toward what is essential.

Most telling was whose head bounced off the chopping block. Valleywag’s resident sexpert, Melissa Gira Grant, one of many reporters paid on per-page-view basis—of course she had to go, generating all those page views like that! The advertising sector Valleywag’s audience attracted were a problem, too: high-end consumer electronics, or as one might generically label them, inessential gadgetry.

Jim Cramer, Mr. There’s-a-bull-market-somewhere, created a bit of a panic telling people to pull their money out of the stock market. Note, though, where he suggested money was better spent: Kraft Foods was one example. Likewise in advertising, online and off, the bull market will be in essential products and in more precise targeting.

But—BUT—trimming the old advertising budget isn’t the best way to grow a company in hard times, is it? Growth means more customers, and it means more aggressively getting the company’s message out there amidst increasing fierce competition for scarce spending money. What sense does it make, when a company is worried how a bad economy will affect sales, to retreat into relative product obscurity? That’s a sure recipe for death.

Sure, for luxury companies—Apple, for example, with their BMW of computers nobody can afford anymore—it will be tougher sailing. That doesn’t mean quit, though. They’ll just have to find where the money is and go after it. They might even need to think about lower-price offerings.
Recession Presents Bull Market For Advertising
In fact, an economic recession should be a golden age for advertising—even for consumers—as companies get more aggressive with their messages and are forced to offer deep discounts to survive. At least that part of the free market should thrive.

Svetlana Gladkova over at Profy offers a nice analysis of Great Depression advertising and how companies in that era learned to thrive in difficult times. So, while the politicians point fingers, good businesses will be hard at work mending the edges of impending doom.
 

Recession Presents Bull Market For Advertising
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  • http://adamrice.typepad.com/kristinarice/ Print Advertising

    People are still spending – look at the debt our country has consumed! It’s obvious people still spend whether they have the money or not. I think some people will postpone major purchases, but a lot of people are still spending. It’s definitely a mistake to cut advertising budgets because people will still spend – they’ll just spend elsewhere. I think changing the advertising focus would work well enough in a recession – change the focus from your high-ticket items to low-ticket items.