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We keep hearing the “sky is falling”, but in reality there are many companies that are still doing ok. Yes, the economy is in a dramatic downturn, but despite the depressing news, business is still alive. How do you communicate this important message to your advertisers? We must convince our advertisers not to panic. First, we must remember as always to ask questions and understand where our customers are today. How are the new economic challenges affecting their businesses? What steps are they taking to address the recent economic challenges? How are they currently measuring ROI on their marketing? We in the publishing industry have been experiencing problems for many years with the trend from print to Internet, price cutting and mergers and acquisitions. These trials have actually made us sharper and prepared us to deal with this new obstacle. Over the last few years we have learned to offer a variety of Integrated Media programs. There are lessons in this diversity for today. Different elements may be easier to sell in difficult times. For example, Peter Brown, Associate Publisher of Crain Communication’s Automotive News (you think you have industry challenges) told me they just conducted a green car conference which attracted 350 attendees in its first year and a significant number of sponsors. They have found that customers will spend money to sponsor a conference for the right attendees even when they won’t advertise. They are going to offer a finance and insurance conference for the first time in May. It will be a virtual on-line event so people don’t have to spend money to travel. Many salespeople and publishers are being proactive as they send out communications to their advertisers to help them see the importance of advertising, especially now. For example, Rebecca Racine and Muriel McDonald, from United Publication’s Security Director and Security Systems News, sent a good letter summarizing the benefits of advertising in a recession. They wrote that “... maintaining and increasing advertising budgets during an economic downturn has proven to be necessary for several reasons:
Molly Trimble, CEO of Continuity Publishing’s New Age Retailer sent a letter saying, “...Should we throttle back? Shouldn’t we save our resources, tend to the business we already have, and quietly wait out the economy? ... These are dangerous questions... By urging caution and promising safety, they obscure a higher truth: If you don’t move forward now to grow your business, your business is at risk...You’ve spent years building your business, finding ways to improve your products, working to give real value to your customers....Haven’t you always managed your company’s money carefully...Have you ever put your company on hold because you didn’t know what tomorrow would bring?” This is a good approach for frightened advertisers. Lessons from the past can also help steer us through these difficult times. Looking back on past recessions (they come every few years) we see that companies that continued to advertise and never skipped a beat were the ones who came out of the downturns in a stronger position. They gained market share on their competitors who pulled back. That increased market share lasted for years afterwards. The positive side of a recession is the opportunity for your advertisers to grab market share from their competitors. An example is Post and Kellogg’s. Post was much stronger than Kellogg’s for a number of years. During a downturn, Post cut their advertising but Kellogg’s continued. Who became and still is number one? You guessed it, Kellogg’s. Remember this example when your kids ask for Kellogg frosted flakes as they quote the “Tony the Tiger” advertisement, “frosted flakes are grrrrrreat!” Another example is Maxwell House and Folgers. Maxwell House was number one for many years but they pulled their advertising in a recession and Folgers jumped ahead. Maxwell House advertised again when the economy recovered but it was too late, Folgers is still number one. On the business-to-business side there are many similar examples of companies that stayed the course and won market share as a result. Many say the 1981-82 recession was the most severe in modern times. In a study of U.S. recessions, McGraw-Hill Research analyzed 600 companies from 1980-1985. The results showed that business-to-business Firms that Maintained or Increased their Advertising Expenditures during the 1981-1982 recession averaged Significantly Higher Sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were Aggressive Recession Advertisers had Risen 256% over those that didn't keep up their advertising. In addition, a series of six studies conducted by the research firm of Meldrum & Fewsmith on the 1990-1991 recession showed conclusively that advertising aggressively during recessions increases both sales and profits. Next, we need to share innovative ideas with advertisers. If you're in a room full of people and they're all talking, all you hear is noise. But if all but one stop talking, he will be heard loud and clear. When was the last time an advertiser said he didn’t want to advertise because of the clutter? Now is his chance to be heard! As always, we must remind our clients of the value of advertising; to brand their product to the correct audience, to generate quality leads and to increase credibility. This branding helps salespeople get to the decision maker and sell their product/service for a higher price. It gives them an edge on competition and helps them close the deals faster. Frequent advertising in a quality media product is a powerful marketing tool. So let’s remember the ROI mantra:
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