Now Is Not The Time to Skimp on Advertising and Marketing

Posted on November 3, 2008. Filed under: advertising | Tags: , , , |

As the economy continues to be of concern to citizens and corporations, we wanted to share a recent article we came across concerning economic downturn and advertising. A question was asked on Google Answers about what companies did well during the Depression. The answer is interesting and offers some great, concrete examples. Following the article is a link to the original post and to references from which informed the answer.

It is important to note that whether the economy is in an upswing or a downswing, consumers still spend money, they still have needs, and they still have wants. Pulling back on advertising only allows your competition to take advantage of a conservative marketing environment, and the advantages that offers, such as reduced media rates, to step in to capture a greater mind share. Taking advantage of new technology and marketing channels is as effective now as it was then. Compare the use of social media and mobile now to Proctor & Gambles use of radio then. The troubled economic times we find ourselves in now can be as good for some as much as they can be bad for others. It’s all on how you take advantage of the situation.

THE QUESTION

What industries fared relatively better and worse in terms of pricing and demand during the Great Depression of 1929? Do the industries reflect a hierarchy of demand from essential consumables to deferrable purchases to capital goods? What specific companies did well in any industry and what distinguishes those companies.

THE ANSWER

To begin, not all was gloom and doom during the Great Depression. It was a time when those who knew what they were doing made great economic strides and the very nature of the depression itself was an economic boon for them. It was a time when several companies benefited from aggressive marketing while their rivals cut back. A good example of that would be Kellogg besting C.W. Post during that time. Consumers didn’t totally stop spending during the depression, most just looked for better deals and the companies providing those better deals came out stronger after the depression ended. When spending picked up, consumer loyalty to those companies remained.

To state a generality, those companies who not only survived but did well and grew during the Great Depression are those who continued to act as though there were nothing wrong and that the public had money to spend. In other words, they advertised. These are industries who didn’t wait for public demand for their products to rise, they created that demand even during the most difficult of times. Because so many companies cut spending during that era, advertising budgets were largely eliminated in many industries. Not only did spending decline, these companies actually dropped out of public sight because of short sighted decisions made about spending money to keep a high profile. These advertising cutbacks caused many customers to feel abandoned and associated the effected brands with a lack of staying power. This not only drove customers to more aggressive competitors but caused a certain among of financial mistrust when it came to making additional investments in the no longer visible companies.

Both anecdotal and empirical evidence support the case that advertising was the main factor in the growth or downfall of companies during those years. To put it bluntly, the companies which demonstrated the most growth and which rang up the most sales were those which advertised heavily. The Great Depression offers classic examples of the power of brand advertising even during times of economic crisis.

Proctor and Gamble

This is a company which has a philosophy of not reducing advertising budgets during times of recession and they certainly did not make any such reduction during the Depression. P&G has made progress in every one of the major recessions and that is no accident. When their competitors were swinging the budget axe, P&G actually increased their spending. While the Depression caused problems for many, P&G came out of it unscathed. Radio took P&G’s message into more homes than ever.

Chevrolet

During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and by 1931, the “Chevy 6” took the lead in its field and remained there for the next five years.

Camel Cigarettes

In 1920 Camel was the top selling tobacco product. American Tobacco Company then struck back with the Lucky Strike brand and by 1929 Lucky had overtaken Camel as the number one brand. Two years later in the heart of the Depression, Chesterfield also overtook Camel. Camel countered with a massive increase in advertising spending and by doing so demonstrated the power of advertising during depressed times. By 1935, it was back on top.

Now, these examples count as anecdotal. But in addition to these examples, studies have demonstrated that during times of recession, companies that maintain advertising during these periods experience higher sales and profits during the downturns and afterward than companies who cut their advertising budgets.

It was also the very nature of this advertising that spurred the growth of two other industries during the Depression. The first of which was radio broadcasting.

Let’s return to Proctor and Gamble for a while. P&G first turned to radio in 1923 advertising Crisco on a New York station. Other products such as Ivory and Lava soap were advertised on ‘product oriented’ shows which were similar to today’s infomercials. But in the heart of the depression P&G took a step which changed not only that company but the broadcast medium forever while creating great demand for its products. The president of P&G at the time was Richard Deupree. In spite of the fact that shareholders were demanding that he cut back on advertising, he knew that people were still buying essential household products. So he created radio programming that did not focus on a product. Because of that, we now have a cultural attribute known as the “soap opera.”

In 1933, P&G went on the air with its first “soap” – “Ma Perkins,” sponsored by Oxydol. P&G was so satisfied with the increase of sales, they went on to introduce “Vic and Sadie” for Crisco, “O’Niells” for Ivory Soap and “Forever Young” for Camay. By the time 1939 rolled around, P&G was sponsoring 21 radio programs and they doubled their radio advertising budget every two years during the Depression.

Radio was one of the fastest growth industries of the depression. P&G virtually built daytime radio with its advertising budgets and programming. Two industries were thriving from the advertising budget of one.

The print media was also a growth industry during the Depression. To give some reason for this, we now return to Chevrolet. the first ads for Chevrolet appeared in print in 1914. In 1927, they began to increase their print advertising budget. As the country moved into the Depression a couple of years later, Chevy did not let its commitment to print advertising falter and its car ads not only kept some publications afloat, it helped many to grow. In as much as the term “print media” covers many outlets, they pioneered the outdoor advertising medium, billboards. Chevrolet also went into radio and sponsored such Depression Era classics as Fred Allen and Jack Benny. Chevy’s print ads appealed to the “emotional” side of a buying decision which was a great move in light of the economic uncertainty of the time.

So once again, those companies which took advantage of the Depression and came through in good form were those who kept their name in front of the public in spite of a lack of purchasing power.

Your question asks about a hierarchy of demand from essential consumables to deferrable purchases to capital goods. In reality there was no such hierarchy. I have tried to balance the examples given to show some spectrum across the board. Proctor and Gamble represents essential consumables, Chevrolet represents deferrable purchases and Camel represents non-essential products. So as you can see, the so called hierarchy of necessity and want was sidestepped by those who had the marketing gumption to ignore such distinctions.

However, capital goods information needs to reflect the entire economic structure of the Depression and not just those companies which were successful. Overall, new production of capital goods less capital goods consumed during the years 1929 – 1939 was near zero. The increase in the money supply during the 1920s also increased the prices of capital goods relative to the prices of consumer goods. This disparity set in motion a boom in real estate and stock market prices and interest rates were driven down by the “increase in Fed money.

It must also be noted that the preceding statement on capital goods is only one of many competing economic theories about the Depression. There are some who say this compounding of assertions is wrong from beginning to end. But in composing an answer such as this, there needs to be one which best meets the nature of the question and in conjunction with the material about public visibility covered above, this is the one your researcher ties into the equation. When money has entered the economy from whatever sources during business fluctuations in the past, has there been a disparity between the increases in prices of capital and consumer goods? That alone is a subject which would take volumes to answer. In fact, it would take volumes just to cover the debate without any resolution coming about.

As far as the end of the question as to what distinguished the companies that did well during the Depression? They were the companies that kept their name in front of the public and created brand name recognition even during the worst of times.

ORIGINAL ARTICLE
http://answers.google.com/answers/threadview?id=178334

SEARCHGoogle

TERMS
great depression, company growth great depression, great
depression success stories
, brand name awareness great depression,
advertising history, new industry great depression, benefits of
advertising

REFERENCES:

“America’s Great Depression – Causes and Cures” –
http://www.amatecon.com/gd/gdcandc.html

“H102 Lecture 19: The Great Depression and the New Deal” –
http://us.history.wisc.edu/hist102/lectures/lecture19.html
University of Wisconsin, Stanley K. Schultz, Professor of History

“Sliding into the Great Depression” –
http://econ161.berkeley.edu/TCEH/Slouch_Crash14.html – University of
California at Berkeley

“Great Myths of the Great Depression” –
http://www.uaca.ac.cr/acta/1998nov/lreed.htm – Universidad Aut noma de
Centro America

“Economic Surpluses” – http://www.sjsu.edu/faculty/watkins/surplus.htm
– San Jose State University

“Accounting for the Great Depression” –
http:/www.stern.nyu.edu?~fperri/papers/account.pdf – a PDF file,
Acrobat Reader needed.

“Four Myths About America’s Great Depression” –
http://www.libertyhaven.com/theoreticalorphilosophicalissues/economichistory/fourmyths.html
– From Liberty Haven

“EAP Vocabulary – Exercise” –
http://www.uefap.co.uk/vocab/exercise/buscycl.htm – some interesting
information about capital goods and business cycles here but mostly in
a modified glossary format

“Creating Mass Culture” –
http://xroads.virginia.edu/~CLASS/am485_98/graham/mass.html
University of Virginia

“The Visitor in Your Living Room: Radio Advertising in the 1930s” –
http://xroads.virginia.edu/~CLASS/am485_98/graham/visitor.html
University of Virginia

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Why A Company Shouldn’t Run It’s Own Social Media

Posted on August 21, 2008. Filed under: Social Media, Social Network, Twitter | Tags: , , , , , , , , , , , , , , , , |

My day job helped launch a new sports league near the beginning of the year. Because of their limited budget, assets, especially access to talent, we made a series of suggestions on how to engage social media to promote the league before the first game was played and the first player was drafted. While we were engaged with them we created a Facebook group, a MySpace page, a Twitter account, and a YouTube Channel. During the first months of the launch we shot a ton of video, interviews with fans, players and league executives as well as town-hall meetings. I Twittered the comments from the town-hall, the interviews, what famous players were stopping by the trade show booth to chat at the various shows where the league was represented. We quickly built a large site for the league that included the videos and links to the social network sites, blogs, etc. Time went on as it often does and the client decided to move. We turned over all of the social media logins, passwords, links etc. to the league to manage.

Because of the hype of the Olympics, sports has been on everyone’s mind, especially the league’s sport since several of the staff in our office played the sport in college. My boss and one of our account execs were streaming the latest event in his office, hooting and hollering at every missed opportunity or great play. I knew exactly what they were watching since I was getting a play-by-play from those I follow on Twitter. I heard the U.S. team one the Gold right before I heard a yell from the other room, apparently the video was buffering!

I instantly jumped over to my former client’s site to see if they had posted anything. I didn’t really expect them to have anything in the can, and figured it’d take them a few minutes to post something on their site. Sure enough, as I write this the posting went up. Excellent, they get about 9 thousand visits a month.

So I bounced back to their Twitter account to see if they had posted anything. Their last post was yesterday. I dropped them a quick note to remind them to post something. I wanted to do a quick search to see how many people were Twittering about the gold medal win. I didn’t have to go far. The front page of Twitscoop showed the sport as one of the top tag clouds, probably around the 6th or 7th most popular (it’s a little hard to tell, using Twitscoop is helpful but not very exact with it’s numbers. So went through with my search to see how many people were talking about the sport. Since this morning there were over 300 Tweets about the competition, that was BEFORE the Gold medal win. I’m literally writing this a few minutes past the win, so you can imagine how much buzz there is at the moment and will be for the rest of the day and week. The spike for comments related to the name of the sport is huge, never mind other terms related to the win.

Twitter Traffic Spike

Twitter Traffic Spike

It’ll be interesting to see what Google trends has to say about the sport in the coming weeks.

All this leads me to the title of the article. Had we or another agency been running the social media engagement for the league, we would have earmarked the possibility of this event as a great time to engage with fans of the sport. We would have had articles ready to go on the site, into the various social network news, status or blogs. We’d be favoriting all of the pirated footage showing up n YouTube later today. We would have been Twittering every play and the news and interviews to follow the big win. The thing that differentiates an agency that is engaged in social media and a company like the league, or just about any other corporate entity, is that we live in social media, on YouTube, Facebook, Bebo, MySpace, Ning, Twitter, Tittr, Mashable, Digg, etc. Not that it’s the fault of a company. Their job is to run their company, it’s an agency be it a marketing agency, PR group, consultant, etc. to know the who, what , when, where, why and how of promoting their clients’ message.

Many colleagues I talk to have the same issue. Because their client has an intern with a Facebook account or their CFO has a MySpace, they think that is all that is needed to be able to appropriately engage the public through social media. It takes more than a copy of Fast Company or Wired and a computer to market using SoMe. This is not a big surprise though. I know plenty of graphic designers, and as one myself, who shudder when clients ask for source files, or decide to tackle graphic design themselves with a student copy of Photoshop. As with SoMe, it takes more than Photoshop to make great, even acceptable, graphic design. You need experience, talent and education to understand hierarchy of information, how to properly use a grid, typography, audience, etc.

This isn’t to say that all companies are void of employees that get SoMe. Some have smartly hired experts in the field, and will hopefully listen to them (Hello, ScottMonty). But certainly the majority of clients who think they’ll take it upon themselves to put some video clips up on YouTube or make the decision themselves that Bebo is a more appropriate point of engagement than Hi5 for their target audience (insert any SoNet in here, you get my point), are doing themselves a disservice.

They say that someone who represents themselves in court has a fool for a client. I’m a little burnt with new business pitches to come up with an appropriate clever line to replace this in regards to PR, marketing, advertising, graphic design, etc. Anyone? Beuller?

p.s. The opinions in this post do not necessarily reflect the opinions of my employer. No proprietary or private information is included and no names were mentioned (except Scott Monty’s) to protect the privacy of those individuals or corporations.

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