Why Cutting Your Advertising Budget When Times are Tough is a Bad Idea


History has a great way of teaching us lessons. During tough economic times, it might seem logical to make cuts to your advertising budget, but in reality, that’s not a sound idea, as it actually hurts your business. By staying the course, you keep your brand and business in the forefront of your customer’s mind. An effective advertising strategy should actually help you increase sales.

Effects of Budget Cuts

From the early 1900s until today, history has shown that effective and thoughtful advertising can help your business increase sales no matter the recession. For example, during the 1923 recession, a study published in the Harvard Business Review (April 1927) showed that “the biggest sales increases were by companies that advertised the most.” To keep that trend going, a study of the 1949, 1954, 1958, and 1961 recessions by Buchen Advertising Inc. showed that “sales and profits dropped for companies who cut back their advertising” and once the recession cleared, the companies who were cutting back actually fell behind their counterparts who had maintained their ad budgets.

Study after study have shown similar results, so there’s definitely truth to it. Any monies your business may save through budget cuts more than likely will be negligent as due to a decrease in sales.

Efficient Marketing

Just because you might be on a tight budget, doesn’t mean cutting your advertising budget should be your step towards staying successful during that time. Like we said, there’s history on your side. Ensure that you have a solid plan in place during tighter times.. Here’s some tips to consider before cutting your advertising budget.

Don’t Waste Money

First and foremost, don’t waste money. Yes, that sounds incredibly simple, but if it was that easy, we wouldn’t mention it. Basically what we’re getting at is not throwing money in areas that don’t focus on your target audience. Radio has an incredible reach and trusted legacy, so it’s a sound investment in tough budget cycles.

Utilize Action Campaigns

Have you considered an action campaign? They are a great way to target your audience through a succinct message that creates an action. If you’re having a grand opening, promoting a new product or running an incredible sale, invest in an action campaign that gives your audience all the information they need to act, from your location, website, hours, or a code for savings on a purchase.

Communicate Clearly

Since you’ll be watching your budget extra carefully and dissecting each move you make with surgical precision, it’s imperative to make sure your messaging is clear, concise and appealing to your target market. You’ll also want to make sure that your call to action is solid. Remember, your call to action is a key component to your action campaign. Much like your messaging, your call to action needs to be clear, concise and powerful.

Strategize With Your Media Partner

Although we suggest you rely on the expertise of your media partner all the time, it’s even more important when budgets are tight. We know you’re focused on running your business and 1,000 other things, so let us help you plan the perfect strategy for deploying your message. Frequency and timing are key. Don’t worry, we’ve got your back.

Stay The Course

It can be incredibly stressful when times are tough and budgets are shrinking, but that doesn’t mean you should give up on advertising. Like we mentioned earlier, there is proven success in staying the course.

Here’s another thought to ponder. A recession or economic downturn might actually provide an excellent opportunity to strengthen your relationship with your customers. Sounds weird, right?

In a study titled “Innovating Through Recession,” Andrew Razeghi notes that a recession is the perfect time to “invest in your customers,” saying it’s a time when they need you the most and loyalty hangs in the balance.

“At a time when consumer sentiment is nearly at an all-time low, rather than reduce customer service, use this time to get closer to your customers, connect with them on a deeper level, and show them what’s possible – what the future will hold,” he wrote.

You want your customers to see that you’re still there. If they see that your business is staying positive in tough times, it shouldn’t be surprising that they’d want to stand by you.

Cutting your advertising budget during tough times might seem like the best option when looking at line items on your budget, but don’t let it fool you. We don’t want you to make the wrong move. Staying the course will ensure that you stay top of mind and help to increase sales. Don’t hesitate to contact us to learn more about how we can help craft your strategies.

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