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March 8, 2010
Bravery's High Return Rate

In 1979, Meldrum & Fewsmith conducted a series of studies analyzing the way companies marketed themselves during the two-year recession from 1974 to 1975. The studies concluded that "companies which did not cut advertising expenditures during the recession years (1974-1975) experienced higher sales and net income during those two years and the two years following than companies which cut ad budgets in either or both recession years."

A few years later, when America's economic atmosphere saw dark clouds again, another group of researchers sought to find out which major brands saw positive effects from their marketing strategies. The researchers from MarketSense studied the recession from 1989 to 1991 and surveyed 101 name brands.

In the end, they found that major household brand names like Kraft and Jif both raised marketing budgets during this recession. The sales of Kraft salad dressing and Jif peanut butter increased by 70 percent and 57 percent, respectively. Additionally, MarketSense found that with increased budgets, Pizza Hut increased sales by 61 percent, and Taco Bell increased sales by 40 percent. However, that was 20 years ago, and surely it couldn't apply to todays fiasco. Right?

Wrong. Over the past year, manufacturing giants Proctor and Gamble have increased their spending in an effort to gain significant market share. As business owners clutch their wallets and hold their purses tighter, P&G takes "a different approach" by not only spending more on marketing than any marketer in the United States, but the world as well.

Bounty, Gillette, Olay, and Tide are all manufactured by the P&G machine and continue to hold dominant shares in their categories or segments. The iconic brands also command significant price premiums over competitors and private labels. With Marc Pritchard, Global Brand-building Officer, at the helm, P&G holds a tight grip on the packaged-goods market and isn't letting go any time soon.

As we look forward to better days, try to keep in mind the only rule for advertising in a recession: Don't gamble. Understand that if you undertake an increased-budget strategy that others in your industry may be doing the same as a way to get an edge. Categories and products may thrive from aggressive marketing in a recession, but it has to be a case-by-case decision. The bottom line: Be responsible, and use what you have effectively.

It seems that advertising is always the first line item cut, whether it is during actual or just perceived hard times. This forces marketing directors to accomplish more with fewer resources. In looking at the aforementioned examples, it seems pretty clear that when companies take the opposite approach and actually invest in their marketing, they are rewarded with significant growth.

Why doesn’t this happen more often? Why do companies retreat and cut instead of invest and grow? For some, it’s a lack of resources. They didn’t plan for the rainy day, so they don’t have anything to invest. For others, it’s a bad track record. They haven’t focused on the brand and instead used the wrong messaging or the wrong tactics and haven’t seen a return on their investment. For most, it’s fear. The status quo is good enough, and there isn’t enough impetus to change and grow. The brave are usually too small to know better and have to grow or die. In either case, they don’t want to just be good enough. They want to be great.

What are you going to do to make your brand great this year? Are you brave enough?

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Jaci Russo is a co-founder and senior partner of The Russo Group, a national branding agency located in Lafayette, LA. She is a brand strategist with experience including strategic planning, consumer insight, brand management, national product launches, and media management for clients in a cross section of industries. She speaks to organizations across the country on the power of branding, changing the conversation, message training, and how to brand through social media.

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