Advertising during tough times pays big dividends

In tough economic times, business owners naturally start looking for ways to cut expenses.

Because marketing budgets often seem so flexible, many owners are tempted to think cutting back on advertising is an easy choice.

But study after study shows, businesses that maintain or even increase their advertising budgets during economic downturns thrive while their penny-pinching competitors suffer.

David Chase, one of the leading thinkers in online advertising, posted an educational piece recently on how businesses that increased marketing during the Great Depression overtook their competitors in market share.

Because so many companies cut spending during the Great Depression era, advertising budgets were largely eliminated in many industries. Not only did spending decline, but some companies actually dropped out of public sight because of short-sighted decisions made about spending money to keep a high profile. Advertising cutbacks caused many customers to feel abandoned. They associated the brands that cut back on advertising with a lack of staying power. This not only drove customers to more aggressive competitors, but it also caused financial mistrust when it came to making additional investments in the no-longer-visible companies.

Both anecdotal and empirical evidence support the case that advertising was the main factor in the growth or downfall of companies during the Great Depression. To put it bluntly, the companies that demonstrated the most growth and that rang up the most sales were those that advertised heavily.

Among the examples Chase cites, Chevy overtaking Ford, Camel Cigarettes regaining top brand position and Proctor and Gamble coming out of the Depression as strong as ever.