- Businesses that maintain or increase advertising spend during recession grow nearly three times as fast as those which cut their spend , according to new research.
The message came from Marilyn Baxter, vice-chairman of Saatchi & Saatchi, at the Advertising Association conference, Gaining Competitive Advantage in Tough Times.
Baxter said businesses which increased their ad spend during a recession were not only significantly more profitable during recession than those which cut spend, but they also made the fastest profit improvement and increased their market share faster once market recovery had started.
In her presentation, based on a PIMS (Profit Impact of Market Strategy) research and IPA Advertising Effectiveness case studies, Baxter said advertising is regarded by some chief executives as one of the most tempting targets for cost-cutting when businesses start bracing themselves for a slowdown.
"Most companies take what they perceive as the safe option and cut ad spend," she told delegates. "This is invariably on the advice of their finance directors. New research suggests that increasing ad spend is actually the smarter and safer option. Finance directors need to think again."
She added: "This new data from PIMS gives ammunition to marketing directors to help them resist the cost-cutting instincts of their finance colleagues and should give finance directors pause for thought."