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Advertising at the End of the Downturn


If your company didn't advertise during the current recession, the upcoming end of this economic downturn is a good moment to do so. U.S. total measured advertising spending during the first half of 2009 dropped 14.3%, according to TNS Media Intelligence. However this percentage means a huge amount of money: $60.9 billion.

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Why have businesses spent so much money in advertising? According to a Ad-ology Research study, Advertising's Impact in a Soft Economy, more than 48% of U.S. adults believe that a lack of advertising by a retail store, bank or auto dealership during a recession indicates the business must be struggling. Conversly, a vast majority perceives businesses that continue to advertise as being competitive or committed to doing business.

C. Lee Smith, president and CEO of Ad-ology Research, says "It is critical to advertise in the current economic climate, to maintain long-term positive consumer perception of your brand... advertising... assures consumers of a business' reliability... "

"It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share, and return on investment at lower cost than during good economic times," said John A. Quelch, Professor at the Harvard Business School.

Patric Barwise, Professor at the London Business School, also warns private companies about the importance of advertising during a recession.

"The most successful companies maximize long-term shareholder value by maintaining their advertising investment when the economy slows down and weaker competitors cut back," he said.

In April, 2009 Costa Mesa, Califorina-based El Pollo Loco, a quick-service chain known for flame-grilled chicken, launched "Que rico pollo", a $4 million ad campaign in Spanish to attract Hispanic consumers. This campaign was launched amid the current recession, precisely, to face a fierce competition among companies trying to reach Hispanics.

Procter & Gamble, the top advertiser on Hispanic media, boosted 2008 ad spending 11.4% to $174.4 million, widening its lead over other marketers, and spent a little more in the fourth quarter, up 13.6%, during the recession, according to Advertising Age.

AT&T was second with an ad spending of $105 million in 2008, down 7.4% for the year but 31.1% up during the fourth quarter, also during the recession.

According to the University of Georgia' Selig Center for Economic Growth, the Hispanic market has a purchasing power of $900 billion a year. Many companies, not only the Hispanic ones, want a big piece of this pie.

(Art Cohen is a freelance writer and an expert in marketing and advertising)


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