eROI Days Email Agency

My business associate and friend Jerry Ketel, partner at Leopold & Ketel Partners, sent this email to several Portland agency owners to help prove to clients that marketing has been proven to grow a brand and its sales, profit, and market share during a recession (notice how I didn’t use this “r” word in the blog title - I’m not comfortable using it yet).  Here was Jerry’s email to me (I added the image after searching on Google “marketing in recession” - it’s actually quite informative):

“There have been a number of studies over the years proving that marketing during a recession is a good investment in the long run. ‘In a recession, dare to invest aggressively in marketing, innovation and customer quality’, is the clear message to be drawn from PIMS (Profit Impact of Market Strategy) research into which business strategies aid success during and after a market downturn lasting several years. Author: Keith Roberts, Journal: Strategy & Leadership, 2003. 
http://tinyurl.com/4sqx8j

The American Association of Advertising Agencies, or AAAA (4A), reports the following findings in a commissioned study, Advertising in a Recession by Bernard Ryan, Jr.

In 1947, Buchen Advertising tracked advertising dollars vs. sales trends before, during and after the recessions of 1949, 1954, 1958, and 1961. Not only did it find that sales and profits dropped off at companies that cut back on advertising. It also found that after the recession had ended, these same companies continued to lag behind those that had maintained their ad budgets.    Cahners Publishing Co, together with the Cambridge-based Strategy Planning Institute, released a report in January 1982 outlining the results of an extensive study. The report disclosed that during recessionary periods, those businesses (who spent more) tended to gain a greater share of market. The underlying reason is that competitors, especially smaller, marginal ones, are less willing or able to defend against aggressive firms.” The study also pointed out those businesses that increased media advertising during the recessionary period gained an average of 1.5 points of market share.

MarketSense compared 101 household name brands during the recessionary period of 1989-1991. The brands Jell-O, Crisco, Hellman’s, Green Giant and Doritos saw sales drop by as much as 26 to 64%. Jiff peanut butter raised ad support and experienced a sales increase of 57%; Kraft salad dressings saw a rise of 70 percent. In the beer category, overall spending was down 1 percent, while Bud Light and Coors Light, each spending ahead of the category, saw sales increases of 15 percent and 16 percent respectively. Pizza Hut sales rose 61 percent and Taco Bell’s 40 percent thanks to strong advertising support, with McDonald’s volume down approximately 28 percent.  http://tinyurl.com/3wtn5p“