Practical Ecommerce

Advertising in Recession Leads to Competitive Advantage

Economic anxiety and a lack of insight have prompted some online retailers to slash their advertising budgets. However, when fewer of your competitors are investing in advertising, you can step up and command a market, improving sales now and in the long term.

In a notable study that is still taught in MBA schools, McGraw-Hill and the American Business Press analyzed the advertising habits of 600 companies during the 1981-to-1982 recession and the subsequent three years. The study found that by 1985 sales for companies that aggressively advertised during the recession had risen 256 percent over their ad-cutting competitors and peers. The more aggressive companies had dominated the market, captured more customers, and retained those customers after the recession.

A Penton Research Services and Coopers & Lybrand study after the 1990-to-1991 recession found a similar trend. Those companies that advertised during the recession were better performing both during and after the economic downturn. And a series of six American Business Press studies dating back to 1949 showed the same positive result for recession advertisers in every major downturn analyzed.

Make It Your Market

The retail market is growing slower in 2008 than it has in recent years. In fact, if you believe new projections from Fitch Ratings, 2008 will be the worst holiday sales season in the past two decades. Online retailers can respond to this downturn in a few ways. Some 60 percent will cut expenses, starting with their advertising budget, according to a September 2008 MarketingSherpa study. When those companies exit the advertising market, they leave a sort of vacuum that a more aggressive marketer can fill. Place your ads now and you can dominate available ad inventories, earning more business now and later.

Re-Bid Your PPC Ads, Acquire New Keywords

With many advertisers cutting their budgets, consider adjusting your pay-per-click ad bids and adding new keywords. One online marketer adjusted his campaign in early November when many advertisers were lowering their Google AdWord spending. In three weeks, he saved about 3 cents per click while improving his average position from 1.9 to 1.5. By the first week in December, that retailer was on pace for the store’s best holiday season yet.

Blog Advertising: Cheap But Influential

An October 2008 study from JupiterResearch and BuzzLogic found that more than half of regular blog readers said that ads on blogs had persuaded them to make an online purchase. Blog writers often engage in a sort of conversation, linking to other blogs, videos, or articles that are discussing similar topics. Try to find blogs that are discussing topics related to your store’s products. If you sell fashion apparel, look for celebrity-watching blogs, fashion review blogs, or blogs for female professionals. Placing an ad on these blogs will have a positive buying influence on your potential customers, and since many marketers are timid about blog advertising, rates are very low—especially in a recession.

Whatever You Do, Don’t Stop Marketing

When the economy slows everyone tends to cut spending, and the available retail market contracts. But consumers are still buying—albeit less—and they are still influenced by good advertising and marketing. Promoting your store in this recession can help it grow market share and sales both now and for the long term.

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Armando Roggio

Armando Roggio

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Comment ( 1 )

  1. Jules January 7, 2009 Reply

    I agree with the theory, but perhaps it takes some nerve to push ahead with this strategy sometimes?