Does advertising really help during a recession?

Should marketers maintain their advertising spend in a recession? The answer may appear a self-evident “yes” to many, but the evidence to support maintaining advertising spend is very weak.

The undisputed champion of marketing metaphors is the former chief marketer of Coca-Cola, Sergio Zyman. Earlier this year he told the American Marketing Association: “Marketing money is like fuel in a car. You take the fuel out of the tank, the car stops. You take the marketing out of a brand, the brand stops.”

Though it was neat, the point was made more forcefully by free newspaper Metro. Last month it ran a newspaper ad campaign imploring companies not to cut advertising in the recession.

It pleaded: “Over the years there has been much evidence to show that when brand advertising stops, awareness of a product fades. This need not happen if you do one simple thing. Stay visible.”

These appear to be simple inalienable truths that all brand advertisers would support. But though Zyman’s analogy is very accurate, Metro’s has one fatal flaw – it is not true.

There is no evidence to support Metro’s claim that when brand advertising stops, awareness fades. There is no proven causal link between the success of a brand and its advertising spend.

Evidence is provided by the Advertising Association (AA) and IPA that, when certain brand advertisers maintain their advertising spend in a recession, they gain strategic advantages. But this evidence is very shaky.

Patrick Barwise’s book, Advertising in a Recession, was published by the AA three years ago and reissued this year. It contained examples – taken from the IPA’s Advertising Effectiveness Awards – of brands which had advertised through the recession of the early Nineties. These campaigns included Barclaycard, Renault Clio and Nescafé Gold Blend.

Each example was used to illustrate how advertisers which maintain their advertising during a recession will benefit, when the recession is over, from having greater visibility and market share.

But the examples listed above do not stand up to close scrutiny. There is no examination of the specific market conditions encountered by the brands. The book gives a very partial, one-sided view of the brands’ performance and often ignores the inadequacies of the competition.

One of the factors that is not considered is the quality of the advertising itself.

Each of the three brands mentioned ran ad campaigns that generated acres of extra press coverage – the Rowan Atkinson campaign for Barclaycard, the Nescafé Gold Blend couple and the Renault Clio “Papa” ads were all popular in their own right.

A further irony is that, despite the report’s assertions about the long-term benefits that advertising in a recession brought to these brands, they have all lost substantial market share since. That would suggest that advertising in a recession does support short-term sales gains but does not support long-term brand success.

The report also ignores the relative weaknesses of competing brands. Barclaycard’s success was due in no small part to the emasculation of Access by member banks such as NatWest.

Recessions always favour market leaders, which benefit from a rush to safety. Many advertisers which are not market leaders are unable to summon the extra resources needed to fight price wars and sales promotions.

The truth is that advertising’s effects cannot be isolated from other factors. The IPA and its awards – which rely on the biased submissions of the agency which has created the campaign – often do not stand up to close scrutiny.

There is no reliable, objective and generally acceptable technique for measuring advertising effectiveness, and the IPA has failed to come up with an objective measure for how advertising works. It has also failed to prove a causal link between advertising spend and brand success.

Instead it has promoted the mythology of Marlboro Friday – when Philip Morris slashed the price of its cigarettes – and supported the belief that price and sales promotions destroy brand values. These myths are unfounded. Has The Sun’s brand been diminished by continuous competitive pricing? Have the supermarkets’?

It’s cheap companies which cheapen brands; not companies who skimp a bit on advertising. Those which chip away at service, fail to innovate and penny-pinch their brand are the ones that pay the eventual price, which was why British Airways, whose prodigal spending on advertising was not matched by its service, was battered by Virgin Atlantic throughout the Nineties. It was not because of Branson’s spin.

The Metro campaign and the IPA’s spin are simplistic. They ignore the many factors which need to be taken into account when deciding whether to cut ad spending. This includes the strengths and weaknesses of their competitors and the state of their own products and services.

Companies facing tough choices should not be bullied into believing advertising is a panacea.

It is all well and good telling companies which are having to cut back to the bone that they should maintain advertising spend. But, as Zyman points out, marketing is like fuel. If the engine isn’t working – as Coca-Cola discovered with New Coke in the Eighties – a full tank of marketing fuel is useless.

Fuel, unlike the engine, can be reduced when times are hard. You might not be able to get quite where you want to be, but at least you can get some of the way there.

Sean Brierley is a former deputy editor of Marketing Week and author of the Advertising Handbook