Published February 2002

Axing ad budget now
can hurt in the long run

This is no time to get weak in the knees from recession fear and cut your advertising budget. Studies have proven it leads to an unnecessary and lengthy sales drought.

Although our region has been hit harder than most, I do not believe we’re heading into an economic Dark Age. Still, many businesses are tightening their belts. Typically, the ad budget is first to get chopped.

There are two very good reasons why lowering the ax on advertising can have a harmful — and long-term — effect.

First, it would cost far more than the amount saved to regain the ground lost. Brand recognition has a very short shelf life in the mind of a consumer. If your market presence diminishes, so will your prospects. Plus, your recovery period will be much longer.

A study done by McGraw Hill Research concluded: “At the end of 1985, those firms that had maintained or increased their advertising during the 1981-1982 recession could boast an average sales growth of 275 percent over the preceding five years. Those who cut advertising realized a paltry increase of only 19 percent.”

Secondly, it’s much easier to gain ground during a down economy than a boom cycle. Why? Because your competitors are cutting back.

Stay the course. You’ll have less ad clutter to contend with and your market share will grow.

I subscribe to the long-term investment strategy, and I have the same philosophy about marketing. If you look at your advertising budget as an expense item, it’s much easier to cut. Think of it as an investment — a long-term investment — and your dividends will be much higher.

If you are forced to cut back on advertising, these tips should help:

• Reduce your “reach” instead of “frequency.” It is far more effective to reach fewer people with a greater number of exposures than a larger group less frequently. Cut back on the number of advertising vehicles you’re using to maintain a high frequency.
• Target fewer market segments. Study the different consumer groups you’re targeting. Rank them based on the greatest response and profit potential. Narrow your sights and aim only at the best group(s).
• Distill your copy points down to one message. Focus on the key message that best conveys your unique selling proposition. Be sure that your target market perceives the key message as beneficial.
• Renegotiate your advertising rates. Advertising space and spots are commodities; when demand on inventory drops, so do prices. Your sales rep would rather renegotiate rates than lose your business altogether.
• Track your advertising results. Measure both lead and sales ratios. Be sure to track the message as well as the medium. Many blame the vehicle when content is the real culprit.

My key message to you is “focus like a laser beam and track, track, track.”

Andrew Ballard, President of Marketing Solutions Inc. in Edmonds, develops brand leadership strategies for businesses and teaches strategic marketing through Edmonds Community College. He can be reached at 425-672-7218 or by e-mail to andrew@mktg-solutions.net.

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