This post will be the last that I focus on content from the Ad Age series on "Marketing In A Recession" as it is focussed on "Cutting Ad Spending In A Recession Hurts Brands Long Term"...
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Smaller, Nonpremium Brands at Risk?
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According to TNS Media Intelligence data analyzed by Sanford C. Bernstein last month, eight U.S.-based household and personal-care marketers covered by the company cut measured media spending an average of 8.8%, compared with a 5% cut among advertisers overall. The fourth quarter, in particular, was the culprit, according to separate research by Goldman Sachs based on TNS data, which found that U.S.-based household, personal-care and beauty marketers slashed spending 14% on average in the quarter, reversing a 3% year-on-year increase in the third quarter.
The reasons behind this surprising turn of events vary, but the implications are potentially dire. Research presented by University of North Carolina marketing professor Jan-Benedict E.M. Steenkamp in a Bernstein conference call last month indicates that companies that maintained or hiked ad spending generally, and TV spending in particular, lost limited share to private labels in recessions between 1985 and 2005.
Companies and brands that went with the flow of the boom-bust cycle by cutting ad spending -- as data suggest household and personal-care players did last year -- tended to lose more share to private labels both immediately and longer term.
Companies whose ad spending didn't vary according to economic cycles -- based on an analysis of Ad Age data on global ad spending -- also tended to increase their stock prices an average of 1.3 percentage points annually ahead of others from 1986 to 2006, said Mr. Steenkamp, who analyzed global results of 26 marketers across multiple industries."
This is a great seeding article to share with your clients about how important it is to maintain their spend and their share.