Advertising Sends Signals... So Does Not Advertising

Marketing budgets are often vulnerable during economic downturns. When a business has a decrease in revenues, it can trigger a need to reduce operating expenses. The reduction is needed to bring the financial picture in line with the lower than expected revenues. Since marketing is a non-essential expenditure and less painful to cut than reducing employees' hours or even making layoffs, cutbacks on advertising and promotions may be targeted. Therein lies a dangerous assumption: marketing is essential.

A study by Ad-ology on consumers' perceptions of advertisers finds that the idea of taking a timeout from marketing during a recession may be hazardous to a brand's health. Almost one-half of the study's participants (48%) indicated a lack of advertising by an auto dealer, bank, or retailer during a recession is a signal that the business is struggling. So, the money saved when cutting back on marketing spending in the short term could be more than negated by customers who switch to other brands or simply stop buying because of reduced confidence.

Brand building requires a long-term time orientation. A focus on making sales targets in a given quarter or trimming costs does little to nurture relationships with customers. Ultimately, a brand is owned by customers. Their thoughts, attitudes, trust, and loyalty are what is valuable. When a business opts not to engage in marketing, it sends a message. Unfortunately, it is a negative message that can undo years of brand building.

Link: Marketing Insights Today - "New Ad-ology Study: Reduced Advertising During Recession Negatively Impacts Consumer Perception"

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