The document provides research and case studies on maintaining or increasing advertising during recessions. It finds that brands that expanded advertising when competitors cut back were able to gain significant market share and sales increases. Following recessions, less than 30% of brands that cut advertising were able to regain the market share lost, while over 70% of brands that increased advertising maintained post-recession growth. Case studies show how brands like P&G, Chevrolet, Kellogg's, Miller Beer, Dell, and Nike grew their businesses through counter-cyclical advertising during past recessions.

1. Why Advertise in a
Recession?
1

2. How to Advertise in
a Recession
2

3. What Do These Brands Have In Common?
3

4. They all expanded their
sales, profits and market
share in a recession, and
most went on to dominate
their category following the
recession.
4

5. How?
5

6. They maintained or increased their advertising
and promotions while their competitors were
cutting back!
They focused on opportunity, not fear.
They increased consumer awareness,
preference and confidence by maintaining a
presence in the market.
6

7. Chapter I
Recessions in Perspective
7

8. We’ve had 22 recessions from 1902-2009
Date Duration
Sept. 1902-Aug. 1904 23
May 1907-June 1908 13
Jan. 1910-Jan. 1912 24
Jan. 1913-Dec. 1914 23
Aug. 1918-March 1919 7
Jan. 1920-July 1921 18
May 1923-July 1924 14
Oct. 1926-Nov. 1927 13
Aug. 1929-March 1933 43
May 1937-June 1938 13
Feb. 1945-Oct. 1945 8
Nov. 1948-Oct. 1949 11
July 1953-May 1954 10
Aug. 1957-April 1958 8
April 1960-Feb. 1961 10
Dec. 1969-Nov. 1970 11
Nov. 1973-March 1975 16
Jan. 1980-July 1980 6
July 1981-Nov. 1982 16
July 1990-March 1991 8
March 2001-Nov. 2001 8
Recessions occur
about every 5-6
years, and last on
average 8-16
months.
National Bureau of
Economic Research
8

9. The Recession Cycle
National Bureau of Economic Research
Duane “DJ” Sprague, 2019 9

10. The Recession Cycle and the Great
Depression
National Bureau of Economic Research
10

11. Recessions are Always Followed by
Expansions and Prosperity
National Bureau of Economic Research 11

12. A d v e r t i s e
Now
So how do we prepare for the
expansion?
12

13. Chapter II
The Research
13

14. “Firms that are able to increase advertising during
recessions are likely to have stronger future earnings.”
The researchers studied data from five recessionary
periods since 1971, sampling data from more than
3,000 firms listed on the public stock exchange.
April 19, 2009
14

15. Harvard Business Review
“Advertising as an Anti-Recession Tool”
Jan-Feb 1980
“The rationale that a company can afford to
cutback in advertising because everybody else
is cutting back is fallacious. Rather than wait
for business to return to normal, executives
should cash in on the opportunity that rival
companies are creating for them.”
15

16. “The company courageous enough to stay
in the fight when everybody is playing it
safe can bring about a dramatic change in
market position.”
16

17. “Advertising should be regarded not as a
drain on profits but as a contributor to
profits…as a means of achieving
objectives. Ad budgets should be related
to the company’s goals instead of last
year’s sales.”
17

18. McGraw-Hill followed the performance
of 600 industrial companies for 6 years
from 1980 to 1985.
McGraw-Hill Research
Laboratory of Advertising Performance
18

19. “Business-to-business firms that
maintained or increased their advertising
through the 1981-82 recession averaged
sales growth between 16 and 80 percent
during the recession years compared to
those that eliminated or decreased
advertising.”
McGraw-Hill Research
Laboratory of Advertising Performance
19

20. “More importantly, gains made during
the recession were permanent and
expanded during the three years
following the recession.”
McGraw-Hill Research
Laboratory of Advertising Performance
20

21. “By 1985, sales of companies that were
aggressive recession advertisers had risen
256% over those that didn't keep up their
advertising.”
McGraw-Hill Research
Laboratory of Advertising Performance
21

22. 100 96 88 89
106
119
100
137
159
195
283
375
0
50
100
150
200
250
300
350
400
1980 1981 1882 1983 1984 1985
Eliminated or Decreased Advertising in both '81 & '82
Maintained or Increased Advertising in both '81 & '82
Sales Indices 1980-1985 (1980= baseline of 100). ‘81 and ‘82 were recession years
© 2009 Larry H. Miller Communications Corporation
22

23. Bain & Company analyzed over 700 firms
over a six-year and found that:
“Twice as many companies made the leap
from laggards to leaders during the 1990-91
recession as during surrounding periods of
economic calm.”
This article was written by Bain & Co. and
appeared in the September 2002 issue of
“Harvard Management Update”.
23

24. Of the firms that made major recession period
gains in revenue or profitability, more than
70% sustained those gains through the next
boom cycle.
And less than 30% of those that cut back and
lost ground were able to regain their
positions.
24

25. More than two-thirds of the companies that
made major gains in our study period did so
during a recession.
Such opportunities always exist for strong,
focused companies, but the impact of
exercising them is much higher during a
recession, when many competitors are
either distracted or hibernating.
25

26. More than two-thirds of the companies that
made major gains in our study period did so
during a recession.
The impact of exercising growth strategies is
much greater during a recession, when many
competitors are hibernating.
26

27. Wharton School of Business
“WHEN THE GOING GETS TOUGH, THE TOUGH DON’T SKIMP ON
THEIR AD BUDGETS” Nov. 26, 2008
“Advertising budgets often appear to be a
dispensable luxury in the struggle to survive.
Executives who succumb to that temptation,
however, put the long-term future of their
companies at risk.”
27

28. “If companies cut deeply into advertising and
communications in a down period, the cost to
regain share of voice in the market once the
economy turns around may cost four or five
times as much as the cuts saved.”
28

29. Coopers & Lybrand and Business Science International concluded
the following in their joint 1993 report:
“Businesses that maintain aggressive marketing
programs during a recession, outperform
companies that rely more on cost cutting
measures. A strong marketing program enables a
firm to solidify its customer base, take business
away from less aggressive competitors, and
position itself for future growth during the
recovery.” 29

30. MarketSense Research compared 101
household name brands during the
recessionary period of 1990 to 1991.
Duane “DJ” Sprague, 2019 30

31. In the beer category overall ad spending
was down 1%, while Coors Light and Bud
Light, each spending ahead of the
category, saw sales increases of 15% and
16% respectfully.
Sales up 15% Sales up 16%
1990-91 Recession
31

32. Pizza Hut sales rose 61% and Taco Bell's
increased 40% with strong advertising
support, while McDonald's reduced
advertising and volume was down 28%.
Sales up 61% Sales up 40%Sales down 28%
1990-91 Recession
32

33. “The best strategy for coping with a
recession is balanced ad spending for
long-term consumer motivation, plus
promotion for short-term sales boosts.”
Conclusion:
Duane “DJ” Sprague, 2019 33

34. The available research
indicates that:
It’s the decisions made
and actions taken
during a recession that
make the biggest
difference in the future
growth or decline of a
company.
Summary of research findings and conclusions from: Bain & Co., Coopers & Lybrand,
McGraw-Hill, The American Business Press, Harvard Business Review, Knowledge @
Wharton, Fortune Magazine, American Marketing Association, MarketSense, Strategic
Planning Institute/Cahners Publishing, Center for Research & Development.
“Riding it out” may equate to driving it down.
34

35. Bain & Co., Coopers & Lybrand, McGraw-Hill, The American Business Press, Strategic Planning Institute/Cahners Publishing, Fortune Magazine
25%
75%
25% of companies see an opportunity to expand
market share in a recession . 70% of these
companies will maintain their growth for 5 years
after the recession. The majority in this category
reach a new and sustained high.
75% of companies will cut staff, advertising, customer
service, R&D, product launches, and acquisitions.
Following the recession less than 30% of those will ever
regain the market share and profitability lost during the
recession. The majority in this category reach a new and
sustained low.
Why do less than 30% of those who cut in a recession ever regain their market share in
the following expansion period?
1. If you cut marketing in the recession you lost top of mind awareness, brand
preference and market share to more aggressive competitors who eroded your
customer base.
2. Nearly everyone is in the pool when the market is hot, so ad rates go up and
competitive clutter increases, causing the impact of your ad budget to decrease.
35

36. So why should we advertise in a recession?
Because following the recession period, less
than 30% of those companies that stopped
advertising during the recession will ever regain
the market share and profitability they lost
during the economic slump.
36

37. Chapter III
Case Studies
What can cars, corn flakes, soap,
beer, shoes and laptops teach us
about expanding in a recession?
37

38. Beginning with the Great Depression,
while competitors cut ad budgets, P&G
has increased its ad spending in every
recession.
And in every recession, P&G has gained
market share.
38

39. During the 1920s, Fords were outselling
Chevrolets by 10 to 1. In spite of the
Depression, Chevrolet continued to expand its
advertising budget, and by 1931 Chevrolet
took the lead.
1933 Ad
1927
Models
39

40. Both Kellogg’s and Post were racing neck
and neck to dominate the breakfast cereal
category in the 1920’s.
40

41. From “The History of Kellogg’s”
at Answers.com
When the Great Depression hit Post
Cereal cut their ad budget, while
Kellogg’s increased theirs by one-
million dollars.
41

42. Kellogg’s upward sales curve continued
right through the depression, and
profits improved from around $4.3
million a year in the late 1920s to $5.7
million in the early 1930s.”
42

43. “When the depression ended Kellogg’s
emerged as the dominant, and most
profitable brand, a position they have
maintained to this day.”
Sales, profits
and market
share were up
Sales, profits and
market share were
down
43

44. During the 1975 recession Chevy faced
mounting inventories, so they abandoned the
traditional practice of setting advertising
expenditures as a fixed percentage of sales.
While the industry volume fell by 10 percent,
Chevy increased its ad budget for its fuel
saving economy models and increased
market share by 2 percent.
44

45. 1974 to ’75 market down 10%, Chevy up 2%
84
86
88
90
92
94
96
98
100
102
104
1974 1975
Industry
Chevy
© 2009 Larry H. Miller Communications Corporation 45

46. Going in to 1970 it was Budweiser #1, Schlitz
#2 and Miller #7 for U.S. market share.
#1 #2 #7 46

47. During each of three recessions in 1970,
‘75 and ‘82 Schlitz cut its advertising
budget.
And during each, Miller increased its ad
budget.
47

48. From 1970 to ‘72 alone, the beer
industry grew by 4 percent.
As a result of increased advertising
during the 1970-’71 recession, Miller's
sales however grew by 31 percent,
outpacing the industry by 27 percent.
48

49. The beer market grew by 4% from 1970-72 alone,
Miller grew by 31% and outpaced the market by 27%
0
5
10
15
20
25
30
35
Industry
Miller
Heavy recession advertising created extreme gains in market share49

50. Coming out of the 1982 recession, Miller
had a solid lock on second place behind
Budweiser – where it still stands today.
And a financially-troubled Schlitz was
acquired by Stroh's.
50

51. • In the 2001 recession, Dell grew unit sales by 11% as
the industry declined 12%
• They purchased an additional manufacturing
company at a recession discount to increase capacity
• They focused on price cuts and promoting the
message of value
• Dell gained more than 6 points in U.S. market share
and captured 90% of the profits in the industry
Results confirmed by a separate study
from the University of California-Irvine
51

52. 2001 computer market down 12%, Dell up 11%
0
20
40
60
80
100
120
2000 2001
Industry
Dell
52

53. In 1990 Nike and Reebok
were virtually tied for first
place in sales.
53

54. “During the 1990-91 recession, Nike
tripled its advertising spending, while
Reebok cut back.”
54

55. “When America emerged from the
recession, Nike's profits were nine times
higher than they were going in – and
Reebok has been eating dust ever since.”
55

56. When it comes to advertising
aggressively in a recession…
56

57. How to
Advertise Effectively in a Recession
57

58. The Golden Rule of Marketing
Nothing replaces stellar
customer service.
As defined by your clients.
58

59. Two Basic Advertising Principles
In Good Times and Bad
1. Create desire for your product,
or find people who already have the desire
2. Find out what people don’t like about doing
business with you, and eliminate those
barriers.
59

60. Remove the Barriers
A barrier can be anything that
makes it difficult to shop, do
business with, contact, service,
return, exchange, or find you.
60

61. Remove the Barriers
• Survey your customers and target audience to
identify all real and perceived hurdles,
inconveniences, difficulties, challenges or
barriers to doing business with you.
• Use secret shoppers and consultants to help
identify barriers.
• Shop your most successful competition and
other related industries to see what barriers
they may or may not have.
61

62. In a Recession Consumers are Seeking
1. Offers that provide reassurance
and confidence
2. Purchases that minimize risk
3. Familiar brands that reduce
uncertainty
4. Purchases that offer extra value
62

63. How to Provide Reassurance and
Confidence, Minimize Risk, and
Reduce Uncertainty
• Quality products
• Great service and support
• Brand recognition
• Guarantee of performance and
satisfaction
• Risk Reversal
63

64. Risk Reversal
The Ultimate Reassurance
64

65. Hyundai is offering economic peace of mind. You
can return your new car if you lose your job
within one year of buying it.
And reliability piece of mind with the industries
first 10 year, 10,000 mile warranty.
Hyundai sales were UP 14% in January ‘09, at a
time when other manufacturers were down as
much as 32%.
65

66. 66

67. The Kellogg’s Depression Strategy
–Sampling (Risk Reversal)
–Premiums (Extra Value)
–Couponing (Discounts)
–Free Recipe Guide (New uses for
an existing product)
–Brand preference through brand
awareness (TOMA)
68

68. • The Kellogg’s Conversion Funnel:
–Radio and print campaign promoting a free
sample size box of Corn Flakes, and creating
TOMA
–Cents off Coupon inside the sample size for
the purchase of a full size box
–Free recipe guide and measuring cup inside
the full size box
69

69. Free measuring cup and
recipe guide in box of
Corn Flakes. 1929
Kellogg’s was the
first company to put
free value-added
premiums inside the
packaging to
encourage sales.
Children’s
book in box
of Corn
Flakes
70

70. Find New Uses for an Existing
Product
71

71. In tough economic
times, A1
repositioned its steak
sauce from steak
sauce to “hamburger
enhancer”.
Includes recipes for how
to use A1 in various
hamburger dishes
72

72. New ways to use
SPAM in this 70’s
recession ad.
73

73. Offer Discounts
and Coupons
Special Recession Prices, and Sale
Events
74

74. Even a parking lot can create an effective
recession advertising message my emphasizing
low cost and free value-added services.
75

75. Classy Recession Ads for Upscale
Products
76

76. Bajio launched a “Daily Specials” value
menu of low priced items.
77

77. The Wendy’s .99 Value Menu
78

78. Outback created a Value
Menu with mass
distribution to promote it.
79

79. 80

80. Online Recession Ads
81

81. Offer Free Stuff
to Drive Traffic
82

82. Free offer
with
urgency
Enter to
Win
83

83. Build a
database
84

84. Promote
viral
marketing
85

85. Offer a
trackable
coupon
86

86. Reposition Your Brand
as a Value Leader
89

87. Wal-Mart is focusing on Low Prices
with the new logo and slogan:
“Save money. Live better”
and became one of the few retailers
to post growth in the 2008 holiday
season.
90

88. The Basic Principles of Effective
Marketing
• Focus on sales training and customer
service for higher conversion
• Remove the barriers to the sale
• Offer a hook or incentive
• Provide a guarantee (remove the risk)
• Up-Sell
• Cross-Sell
• Re-Sell
91

89. The Basic Principles of Effective
Marketing
• Dominate a medium
• Concentrate on a consistent message
• Increase share of voice
• Accentuate the positive attributes of
your brand
• Market to your base
• Provide samples
92

90. The Basic Principles of Effective
Marketing
• Innovate and stand out
• Command a premium price if you have
strong brand equity
• Identify new customers
• Expand to new markets
• Make quality improvements
93

91. The Basic Principles of Effective
Marketing
• Enhance relationships
• Stress value rather than low price (high
quality and service for the money)
• Promote made locally or in the USA.
• Ads should instill a sense of control,
value, and positive emotions to the
consumer.
94

92. Thank You!
“When times are good, you should advertise.
When times are bad, you must.”
Entrepreneur Magazine
January, 2009
Duane “DJ” Sprague
https://www.linkedin.com/in/duanesprague/
95