Why Advertising in a Bad Economy Is Good

Man dealing with bills
••• Getty Images

In a recession, the first dollars that a company usually cuts come from the advertising budget. That's a big mistake. Advertising in a recession is actually a smart business move to grow your business, both now, and for the future. It's not the risk you may think it is.

McGraw-Hill Research conducted a study of U.S. recessions from 1980-1985. Out of the 600 business-to-business companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256-percent growth by 1985 over their competitors that eliminated or decreased spending.

American Business Press analyzed 143 companies during the economic downturn back in 1974 and 1975. Companies that advertised in those years saw the highest growth in sales and net income during the recession and the two years that followed.

The numbers aren't a fluke. They prove there's a reward for companies who are aggressive with their advertising efforts in a recession. Here are even more reasons why you need to advertise your business in a bad economy:

Your Competition Won't Advertise

Most small businesses have a limited advertising budget. During a recession, it's easy to make up some of those dollars by holding back on advertising. But all that really does is open up the marketplace for that company's most savvy competitors. The presence the business has spent ad dollars on to build up is now an open field for the competitors that are willing to advertise.

Let's say you own an auto parts store. Consumers still need your company, no matter what the economy. Cars still break down. They still need windshield wipers and people will even buy those tree air fresheners. By advertising when all other stores are pinching pennies, you can scoop up a ton of new business. 

You Can Tailor Your Message and Make More Sales 

Think of it this way: during a booming economy, people are playing more fast and loose with their money, so they're not as discerning. While you may believe that is a good thing, it can hurt a lot of smaller businesses. Money is no object, so the big brands can scoop up premium advertising space and blast it at every conceivable target audience. But during a recession, consumers pull back hard on those spending reins and are much more careful about how they put their money to work.

That's when you can really take advantage. The big brands will reduce their spend, giving you not only a chance to talk to people you would never usually talk to but to also tailor cost-saving messages just for them. You know that what's first and foremost on their minds is money, and saving it. Now, they can get a quality item for less, because they're not paying for a bunch of advertising and marketing (Beats headphones are a prime example of this...mediocre product, huge ad, and product design costs). This is your chance to talk openly about costs, and how you can help. Once the recession is over, you'll have gained a whole new customer base that won't go back to the competition. 

You Can Create a Long-Term Position for Your Business

Standing out in the marketplace is hard enough when you and your competition are battling it out in the ad world. As your competition cuts back on ad spending, your advertising can cut through that clutter.

Consumers may not be spending as much but they are still spending. If you're not the company they think of when they do spend, your sales will decrease. While your competition is cutting back, you have the chance to be the company consumers spend with now while gaining their future business as you continue to advertise in good times and bad.

You Can Establish Advertising Contacts

This is the perfect time to establish a relationship with the person you'll be doing business with at TV stations, radio stations, magazines, online, etc. An account executive can be your go-to contact to get your ads in prime placement, negotiate good deals on rates and even get extras thrown in for your ads.

You can also use this new relationship to further grow your business. Talk with the AE about sponsorships, advertising trades, and partnering.

You Will Get Better Deals on Advertising

This is where you can use your new advertising contacts. Ad inventory still has to be sold. TV stations, radio stations, websites, outdoor vendors, and magazines still have budgets to make. 

Now's a good time to get deals on your ad space. You can get more exposure through more ad placement and even freebies added into the mix. If you're trying to get airtime on TV, for example, a station might also offer online advertising on its website as part of the deal. Or to be more accurate these days, buying a huge amount of space online could lead to additional impressions elsewhere, again thrown in as a special offer. 

You Can Speak Directly to Bargain Hunters

Don't be afraid to address the bad economy in your advertising. Customers are looking for good deals. Some national advertisers are a prime example of this.

Travelocity aired a simple commercial to announce its Silver Lining Sale. In the first three seconds, you see the words, "We know times are tight."

Wal-Mart continually runs effective ad campaigns in poor economic climates. The commercials don't say, "Hey, come on out. We've got electronics, clothes, sporting goods, prescriptions and more at a low cost." Instead, the ads focus on very specific items and how much you'll save over a year by purchasing these items directly from Wal-Mart.

In a bad economy, there are many opportunities to expose your business to new customers that aren't always possible in a good economy. Every one of them can be explored to help you solidify your place in business and stand out from your competitors.