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“The best defense is a good offence.�

Why advertise in newspapers during a recession? Share improves for immediate and future gain

Why Advertise?

When a recession hits, businesses have three options: cut, hold or increase advertising spending. The Strategic Planning Institute reviewed 749 businesses and 1,639 brands and came to the following conclusions for each strategy:1 Cut: Reducing advertising to increase short-term profits did not work. Hold/small increase: A moderate increase (0-20%) in advertising spending in a soft market can improve share. Improved share leads to higher return on investment. Increase: Those companies that increased their advertising spending (+48% on average) during a recession earned double the share gains of those that increased more modestly. This does result in a drop in return on investment in the short term (-2.7%) but this is outweighed by increased revenue and profit growth when economic conditions improve. Queen’s Professor Ken Wong highlights that companies that commit to ad spending during a recession, garner gains (vs. their competitors) over the first two years of recovery.2

Advertising or promotion?

Advertise - it builds strong, profitable brands

Companies that invest in long-term brand building via advertising are more profitable than those that put most of their marketing budget into promotions.1 Advertising impacts perceived quality, share of market and profitability. There is also a carry-over effect that extends beyond the period in which the advertising runs. Overall, advertising builds brands. Brands command better margins and are more resistant to price competition.

Why advertise in newspapers?

Greater readership for the same price

A recent Ipsos-Reid study indicates readership soars in times of crisis.3 When something happens, Canadians want to make sense of it. Newspapers provide analysis and insight into what is happening and why.

Political crisis in Ottawa

40% read newspapers (print or online) MORE

2008 Canadian Election

32% read newspapers (print or online) MORE

Downturn in the World Economic situation

30% read newspapers (print or online) MORE 0%

10%

20%

30%

40%


“The best defense is a good offence.”

Why advertise in newspapers during a recession? Being relevant

What works in newspapers? Ipsos-Reid also finds that more than a quarter of Canadians look at newspapers and merchant inserts more often to find sales, discounts and bargains during tough economic times. Newspaper advertising can be crafted to work in concert with the news of the day – making the advertising more relevant to the reader. For example, the Desjardins ad talks to the markets’ roller coaster ups and downs. Newspaper ads can be delivered with precision timing. For example, right after Christmas, when consumer spending is tight from the holidays (and the tough economy) and New Years’ resolutions are top of mind, Shoppers Drug Mart offers deals to its reward card holders on healthy living products.

How to do it right?

Craft the message and deliver it consistently

1) Highlight your brand’s unique value proposition4 Communicate how your brand provides a valuable solution that addresses a real consumer need. And recognize that consumer needs are different during a recession (e.g. revised payment plans, the need to feel enjoyment/special when they do spend).5,6 For example, IKEA, recognizing that Canadians may be staying home more, highlights its home organization solutions. 2) Integrate the messages across all media7 All communication should look, feel and sound the same. Each execution builds the overall message. Using IKEA again, all its messages are linked through its use of a fun, quirky sensibility.

1 Advertising in a Recession, London Business School (2008, World Advertising Research Center) 2 “Aldo says: change or die”, Strategy, January 2009 3 Ipsos Reid, December 3-7, 2008 4 “Study: Downturn Gives Rise to New Consumer Beliefs”, MediaPost.com, August 19, 2008 5 “Soothing the Savaged Consumer Soul: 11 Ways to Show Love When Times Are Tough”, MarketingProfs.com, August 19, 2008 6 “Brand strategies for an economic downturn”, Admap, September 2008 7 “Recession proof businesses”, Ad Age, December 15, 2008


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