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Paid advertising during the recession?

Paid advertising during a recession?

by

Mrs. A. Bharathy

Researcher (Dravidian University) and

Lecturer, Department of Management

Pondicherry University Community College Pondicherry

Advertising is said to create magic in the marketplace and on the other hand it bears the unfair burden of being directly related to sales performance. Although it performs a multitude of functions ranging from creating awareness, understanding of the brand building, like the band strengthening, reinforcing the character of labor, etc.. The paper "Does advertising pay in a recession? "deliberates on the boardroom much debated issue especially during recession. One question that has been raised repeatedly over the years by the agencies and clients since the 1920 "Your company advertising for as an expense or an investment?" and "How others have succeeded in a weak economy?" This document highlights by in-depth analysis of past and present data to increase the credibility of using advertising as a tool to reach markets target during a recession or not.

Advertising magic wand on the market is important for building branding and marketing. It is important for tangible products, such as mobile phones, refrigerators, televisions and computers. It is also important for services such as hotels, holiday resorts, airlines and tourism of the state itself. The same is true for ideas and causes. All dealers want consumers to buy their brand. Businesses advertising with just this goal in mind. But it Here one must remember "Is not it not an unfair burden on advertising?" when the final sale depends on many factors and it is no direct relationship between the company sales and advertising expenses. This is in contrast to the distribution and sales or customer service, Similarly, where one can establish a direct relationship between one of them and sales.

Hence the role of Advertising is limited to awareness or information and the favorable attitude of the development said. Although its role is limited, the agent Marketing is to compare costs of different elements of its communications mix. A criterion is cost per thousand people. It is the most low in advertising. However, we must keep in mind that people are generally biased against advertising and many still believe that it a waste of organizational resources, especially in a country like India. The concept of advertising is much debated, even in economic conditions normal, for example

"The money spent on advertising is a waste!"

"Advertising is economic waste! "

"Advertising misleads consumers!"

It is therefore very natural that businesses are feeling the heat of lower incomes and erosion of net worth in times of recession, one of the first things that the CEO decide to save money is to make their ax on the advertising budget. However, this depends primarily on whether the company consider advertising as an expense or an investment?

THE ISSUES AND OUTLOOK

The issue of advertising during a recession is one that has been asked repeatedly for many years. Interestingly, the response rest does not seem sufficiently clear to traders.

The answer is that advertising during a recession provides a window unique opportunity for investment purposes:

1) Build equity;

2) strengthen your customer;

3) Gain new customers, and

4) Make advances on your competitors have cut their advertising during the recession. This window of opportunity is created by the understanding that advertising is an investment not an expense.

However, it is easy to understand why many people do not regard advertising as an investment, but to treat it as an expense. This is because advertising often does not represent a fixed cost, such as capital expenditures, which are investments. Given the possibilities mentioned above, it is logical to infer that advertising during a recession should not be deleted.

ADVERTISING DURING THE RECESSION IS NOT AN OPTION

Times are tough for business. Many local operations – large and small – are struggling to cope with losses during this difficult year. And companies everywhere are facing tight budgets and difficult decisions. Small retail stores from difficult to supply their shelves to meet the cost-cutting tactics of competitors, and learn by keeping consumers whose purchases frugal they scan more now than ever. But the reality is that everyone still needs petrol for his car. Families need to eat. Children return school clothes and supplies they need. And people need supplies of light bulbs to gardening tools. Businesses, large and Small, who sit back and weather the storm in the belief that once the economy picks up, it will be absent on business are immense possibilities. Companies must demonstrate to consumers that they are stable enough to withstand tough times. It is now time for businesses to chip to capture market share and position itself to lead the economic recovery inevitable. Business owners need to remember what it was than launching a new business, gain name recognition and attract customers. Removing the public until the economy recovers and increases cash flows means having to reinvent the company all over again. A cost that far outweigh a few quarters with lower profit on average.

Pessimism of advertising during RECESSION

The three most common myths admitted to not advertise during a recession are:

"People do not buy much in a recession, then Our advertising is lost;

"All companies are reducing their advertising budgets and, therefore, competition is so much demand advertising "and

"The money saved on advertising helps us pay dividends to shareholders."

Myth 1: "People do not buy much in a recession, so our advertising is wasted" The Wrong -. People do not buy much in a recession and therefore we should advertise more aggressively to get people to buy. Pessimism advertisers is mainly a myth, hardly justified by the facts. In addition, some recent studies have shown that recessions have only about 2% discount available income of the population, but despite that people tend to step back and maintain liquidity by example. Study conducted by McGraw-Hill showed that the advertisement on page 13 in a recession increased recognition of the company from 32 to 45%. 1980-85 recession for all businesses which did not reduce their advertising budgets have increased sales from 16 to 80%, and most important was the fact that the increase in sales was not something temporary but permanent.

Myth 2: "All businesses reduce their advertising budgets and thus competition does not do much advertising demand "Wrong -. This is just the right time for you to take charge and go against your competitors and if your competitor does not advertise during a recession – You can make a dramatic improvement in market position. for Example: In 1975, GM and Ford have used two different strategies when GM kept with the same budget and Ford reduced budgets – So, while GM increased sales and Ford sales fell 14%.

Myth 3: "The money saved on advertising support us to pay dividends to shareholders. "Wrong, try to find a favorable position lost during a recession is more expensive in the long term rather than to keep continuing to advertise. It is likely to rapid erosion of the franchise consumer that the advertiser has taken years, even decades to build. It is almost impossible to track former clients once they have adopted competing brands. And, of course, companies can more easily explain a decrease in dividends if the money was used as an investment to protect market share.

However, this leaves a question "would not be continuing or increasing the advertising budget in a recession is not in itself a control mechanism to the recession.

HOLDING / Budget Increase ADVERTISING FOR BETTER PROFITS

Despite the congestion, a large advertising have broken the clutter and have done wonders in building brands and their market shares in recession / slowdown. Some examples are interesting.

Vodafone Zu Zu series of ads released in the second PW-20 cricket matches in South Africa have been so much a hot favorite among the spectators that man's trophy series should have been given. series advertising featuring Madhavan and Vidhya Balan Ariel very well connected the various services offered by it to consumers. This went a long way in return brand and increase its sales on the Indian market, despite the recession.

Although online travel and finance categories saw a slowdown, there was a resurgence of insurance clients -. Even in the recession insurance companies AXA Bharti, ICICI Prudential, Metlife – stepped up their advertising campaigns. Also, new categories emerged in the recession – Driving has become more active and increased their expenditure. All passes, despite the recession, went to India in 2008. Education is a category that has been stable and growing, electronics general public has grown up with Nokia significant online marketing budget.

Another example is a division of General Motors' Chevrolet, which faces mounting stocks in 1975 due to recession and high fuel prices. The company has abandoned its traditional practice of setting up its advertising spending a fixed percentage of turnover. Although the volume has dropped 10 percent because of the economic downturn, Chevrolet maintained its advertising budget and even increased advertising for its economy fuel economy models. Ford Motor Company, on the other hand, reduced by 14 per cent of the advertising in order to consolidate the benefits. Perhaps it reached its goal, but it has increased its market share Chevrolet of 2 percent.

According to ADEX (a division of TAM Media Research) An outline of the announcement happening in our country in 2008 indicates

• 26 percent increase the volume of TV ads in 2008 * compared to the same period in 2007.
• "Food & Beverages" was the Top area of ​​television advertising in 2008 *.
• "Cellular Phone Service category 'had maximum volumes television advertising in 2008 *.
• "HUL has maintained its first place in the years 2008 * and 2007.

Data for 2008 * Valid until 27 December '08

• * In 2008, television advertising grew by 26 per cent 2007.

• Cellular Phone Service, "" Social Ads "," soaps "and" Cars / categories Jeep "have maintained their respective ranks in 2008 * and 2007.

Other companies in the world who took advantage of the advertising period recession to establish strong positions while developing the brand include names as diverse as Bristol Myers, Campbell Soup, Coca-Cola, Gillette, Pillsbury, Apollo Hospitals, Paramount Airways, Procter and Gamble, RJ Reynolds, Rubbermaid, Levi Strauss, Stroh Brewery, United Airlines Welsh food and others.

ADVERTISING DURING THE RECESSION

The statistics of the recession in the United States show that past is short. On average, they are soft. During a recession GNP generally decreases by about 3%. The exception is of course unusually severe recession from 1973 to 1975, when GNP declined 4.3%. Furthermore, we see that recessions are selective. recessions impact some industries, products and regions of the country and drive around other entirely. Studies show that among the industries and products most affected are: automotive, home furnishings, major appliances, Travel and airlines, convenience foods, aluminum, steel, petrochemicals and synthetic fibers. Relatively little affected are: wines and spirits, tobacco, small appliances, packaged goods, computer industries and service.

It's here we must reflect on the strategy of birds, like a bird flying high, so high it flies, comes to rest for a while before it starts to fly high again, even so the recession is just one phase in the cycle world. In this current scenario recession of 2008 is as depression 2009 of many business houses are strategizing on measures such as reducing costs, downsizing, reorganization of businesses on the basic skills and the like – cut the advertising budget seems to be a priority in the wish list of many real corporate.But studies confirm that advertising aggressively during recessions not only increases sales but increases profits. As Sir John Hegarty, chairman and chief creative officer worldwide, said Hegarty Bartle Bogley "Recession is good for advertising "But the key ingredient to the success of the advertising downturn would be.:

"Thinking should be inventive, especially when the going gets tough, "as

• Sitaram, Dabur said if we keep our ad goes untouched at this time and continue out with innovations that we can win market share. Their strategy is to deliver value and create delight.

"Select offers the most compelling and advertising must carry them to the scene in the most compelling, inviting and memorable ways"

• Sandeep Singh, Deputy Managing Director, Toyota Kirloskar Motor, said in direct contact with customers and offering special pricing on a new car coupled with an innovative awareness campaign.

"The way for companies to maintain their market share is simple: advertising "

• Take, for example, real estate and development industry. Despite a decrease revenue, The Ritz Carlton continues to rise, real estate brokers continue to show ownership, Why? Because these companies continue to announced. Construction starts to pick up, the availability and the need for owner-occupied housing has not diminished.

So finally we can say that advertising does not pay during the recession, but in the choice of advertising, you can ask yourself two key questions: Is he saying the right thing brilliant about the product, service or offer? Does it say in law, vividly – in words and pictures that feature the product, instead of subordinating the product, and that are appropriate for the brand?

You must also, of course, run with the right advertising, bright media plan, so you can reach your target audience in the most efficient and profitable. When you have such advertising, your customers can invest in it with knowledge it is much more likely to succeed. In fact, customers can know that their advertising does the same for them that advertising can do. Why? Once advertising is saying the right thing in the right way at the right place, you've done everything you can to maximize its effects.

As is currently being aggressive and not do what many business people do, which is the quickest route and easier to reduce overhead costs by reducing their advertising budget. These secrets of advertising are particularly useful in difficult times – and extraordinarily profitable in good times. As I focus "Recession is good for publicity"

References:

• 1. "Advertising expenditure or an investment, " www.yourstory.in article by Manik Kinra, CEO, Creadivity
  2. "The Recession is good for publicity ", The Hindu BusinessLine, April 16, 2009, article by Sir John Hegarty, chairman and creative director through the world, Hegarty Bartle Bogley
  3. "Business News", July 2009, Nanayam vikatan
  4. "Marketing in a downturn" The Economic Times, February 19, 2009, article by Vinay Kamath et al
  5. "The secrets of creating successful advertising." Book written by Tom Atte
  6. "Advertising Management" book written by Nove, Bovell, Thill and wood
  7. Adex India (a division of TAM Media Research)
  8. "Intelligent Marketing downturn", The Economic Times, November 25, 2008, article by Amit Sharma R & Reshmi Dasgupta

About the Author

Mrs. A.Bharathy

Research Scholar ( Dravidian University) &

Lecturer, Dept. of Management

Pondicherry University Community College , Pondicherry

 

 

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