Companies raised their marketing spending in this last recession and saw sales increase.


When should a company increase marketing spending? Most companies during a recession think it is wise to reduce marketing budgets to save money, and the drop has been extreme as spending plunged 12.3% — the largest annual drop ever, more than three times more severe than the next worst drop of 3.9% in 1991.

But 26 of the top 100 marketers bucked the trend and boosted 2009 marketing spending. 70% of those spending more saw a U.S. sales increase – double the success rate of those who reduced their spending according to Kantor Media.

Revenue driver.

Savvy marketing executives and business owners understand that marketing, if done properly, drives revenue and is not a discretionary expense. Companies that invest in marketing initiatives during a recession can come out stronger and ahead of their competitors as the recession ends.

Many of the 26 top marketers that increased their marketing spend were from the traditional recession-resistant business sectors of food and packaged goods. This is to be expected, but others were companies that clearly went against the trend: The Gap, Safeway, Fry’s, Progressive Corp. Insurance, Wells Fargo Bank, DirecTV, Dish Network, IBM, Microsoft and a for-profit educational company, Apollo Group.

Relevance and execution.

What’s important for businesses is to remain relevant to the current market situation and to execute marketing strategy well. And while this sounds obvious, during stressful times managers and business owners are pressured to become short term focused with a strong bias toward extreme cost cutting. And marketing can be seen as not essential to production and therefore easy to cut. But this takes the business focus off of the customer.

Studies show that companies that cut marketing spending during recessionary times find themselves emerging with a smaller market share indicating a relationship between marketing investment and sustainable long term growth. Nevertheless, it is only the business owners with a vision and discipline to stay the course that will maintain or increase marketing efforts in a downturn.

Increase share of voice.

The good news is, they have fewer voices to overcome in the marketplace as competitors rein in their marketing efforts. They can take advantage of the general decrease in marketing spending to seize a greater share of voice in the less cluttered marketplace. That in itself is a benefit for the advertiser who remains visible.

Let us know what you think.

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One Response to “Companies raised their marketing spending in this last recession and saw sales increase.”

  1. tory_falk says:

    I agree, especially for retailers. Just when you think you have to cut back the marketing budget, you should probably be INCREASING the spending. You need to increase marketing efforts during a slower economy because there are fewer consumer dollars available to spend.

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