It is easy to cut advertising, mainly because it is an expense that is not committed and has not been incurred in advance. Likewise, cutting advertising spending is a solution with immediate results and no visible effects in the short term, since people have memory and there will be no effect if it is turned off for a few months of the year. Therefore, in a crisis it makes sense to reduce advertising or eliminate it altogether, as the savings go straight to the bottom line. Okay, not so fast! Well, I am sorry to disappoint those who believe in such a shortcut or easy solution, because on the contrary, the above paragraph is perfectly wrong insofar as it is proven, argued and widely documented: increasing advertising during a recession, at the same time your competitors are cutting back, has historically improved market share and ROI, at lower costs than in the best of times.
Collective myopia and conventional behaviors, even more so in times of crisis, are opportunities to exploit. In fact, companies that did not cut their advertising spend during the recession of ’74-’75 experienced higher sales and net income during those years as well as during the following two years, compared to those brands that decreased their budgets. Similarly, during the advertising-recessionary period of ’90 and ’91, companies that maintained or increased their advertising spend enjoyed higher sales growth from ’90 to ’95.
However, it is clear that today the answer is not in advertising investment alone, and therefore, it is key to focus on enriching brands to deliver valuable, surprising, relevant and exciting solutions, while most only justify their price or devalue it with offers and promotions. It is preferable to create an irresistible experience for the consumer, and thus convert her into a buyer, before only assuming that she may prefer us to be traditional. The old formula of “good” products with extraordinary advertising no longer works, which is why it is key to insist that an “extraordinary” product is imperative. For many years we differentiated average products through advertising, and although it was effective in the past, today the brand has to reflect an extraordinary product or service, or there will never be enough advertising for any sustained success.
Investing in a crisis or recession is a decision for those who understand that even this will be temporary. It’s simply understanding that people will compare more when their lives are under pressure, and therefore, resources require intelligence and a sense of timing. This is how PG compares its Tide detergent with professional laundry, how iTunes moves its strategy from selling albums to songs, or how the Tata Nano, the cheapest car in the world, chooses to compare itself with the value of a motorcycle, or in Costa Rica, for example, how Epa continues to invest in a timely selection of its promoted products, strategically ignoring the crisis of the moment, or how in Tribu we reinvent ourselves and also add Sustainability, Experience and Digital to conventional services.
References in times of crisis are exciting when we remember that during the recession of the mid 70s, Bill Gates founded Microsoft and Frederick Smith founded Fedex, Time launched its People magazine and PG launched Pringles, today a brand with more than a billion dollars in sales. In those years, unemployment in the United States reached 9%, inflation reached 11% and the stock market succumbed by 48%, so it is necessary to put our current situation in perspective and review our daily decisions.
It is time to be authentically creative and migrate from a focus on price and reduction to one of experiences that we want to repeat over and over again. From caution to courage, from short term to long term, from rational to emotional, from delivering to delighting, from selling to connecting, from calculating to empathizing, from cutting to engaging, from hard-sell to trust-sell. It’s time to be among the winners, and for this reason, there is not a day to lose in the quest to create Lovemarks, i.e. brands that inspire loyalty beyond reason.
Thus, a brand that has moved from a place in the marketplace to the heart of a culture, belongs to the people and not to its manufacturer, is based on respect as well as love, is sought after until it is found, is authentic, legitimate, simple and preferred, and deserves more than ever, determined investment in advertising.
Opinion published this week in El Financiero.
