Car Crash With Back To The Future.Music.In.The Background Why You Should Advertise in a Recession

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Why You Should Advertise in a Recession

The short response to this query is: Because it works. It always has, and it always will, in any economic climate.

The more important aspect of this subject is how you should advertise anytime… especially in a recession. To effectively advertise, it is mandatory to understand the philosophy and use of each medium available. Therefore, in this informational offering, we’ll address, in lay terms, these areas of interest:

  • The definition of Recession
  • The philosophy of Advertising in a Recession
  • Hunting for Customers with Advertising
  • Being Hunted by Customers with Advertising

The definition of Recession: An economic recession is, by definition, “a period of reduced economic activity”. The US economy and the global economy, by extension, is a living, breathing thing. Compared to the human respiratory system, there are striking similarities.

As we breathe, our lungs inflate and deflate. These events are so natural that we don’t even notice them in the course of our daily routine. They happen while we are occupied with the activities of the day.

We become aware of our breathing when we have engaged in enough activity to need a period of rest and rejuvenation. We can feel ourselves tiring and we most likely experience a yawn; our system’s last ditch attempt to get the needed, precious oxygen to our brain to make it alert and fully functional again.

Then we succumb to the need for renewal, and we fall asleep. We’re not deceased, simply resting. Our blood pressure drops, our temperature lowers, and our respiration becomes shallow and slow. The more sustained and strenuous the activity of the day was, the more soundly we sleep. The amount of time and the quality of our sleep is directly related to the energy expended prior to this period of rest. That’s the reason we “sleep like a Log” after a hard day.

Translate this scenario to the economy and we can identify a recession. It is the period following a sustained and energetic flurry of economic activity during which we’ve used all our available resources. Now the economy needs a rest. These occur cyclically, just as human breathing does. In the 233 years of US history, there have been 22 identifiable recessions or sleep cycles in the economy.

Once the economy has recovered its energy, it is ready once again for the normal level of activity with routine inflating and deflating.

The current recession of the early 2000’s is arguably the worst economic downturn since the Great Depression following the crash of the US Stock Market in October, 1929. In other words, the economy is exhausted, and “sleeping like a log”. Some forecasters feel that when it wakes form this cycle, it may never be the same again. The traumatic events leading up to this sleep cycle, they predict, have changed the way we do business forever. We will all be more cautious and frugal in the foreseeable future.

The philosophy of advertising in a recession

Why you should advertise in a recession and how to do so are closely tied to the overview of what happens to a river during a drought.

Picture in your mind a large, flowing river. It’s teaming with life and activity. Imagine that you are dependent on the flow of that water for your livelihood. Let’s say you purify, bottle and sell river water to travelers. Positioned on the bank of the river, you have a plentiful supply of flowing water at your disposal with minimal effort; simply divert a small percentage into your place of business, capture it, process it and you’re are a profitable entrepreneur.

What, though, if drought conditions set in? The river doesn’t dry up completely, but it has receded from the bank and you have no more water being diverted into your processing equipment. Would you simply presume that since you’re not immediately adjacent to the flow of water any longer you should just sit and wait until it rains again and hope for the best?

Typically you would find yourself busily relocating your diverting mechanism back into the flow of the river. And you would be willing to make the needed adjustments as often as the circumstances require. When the flow has receded significantly from your processing facility, you will most probably find the installation of a booster pump necessary for the survival of your enterprise.

When we visualize the flowing river as dollars being spent, we get a sense for a compelling reason to advertise during a recession. When money is flowing freely, almost anyone with an offer to sell a product and/or service has customers; and collects or “diverts” some of the available dollars into their establishment.

When the available dollars have receded, our diverting mechanism, our advertising/marketing program must adapt to the changing circumstances. We want to relocate our efforts where the flow still exists. And we want it embedded in the deepest part of the remaining dollar flow. When the force of the economic flow will no longer yield sufficient volume to sustain our business, we need to install a booster pump to draw dollars from a weak flow. That would be a new and/or additional marketing/advertising initiative.

Hunting for Customers with Advertising

One traditional approach to advertising is to “hunt” for customers with our advertising. Here’s what that means: we have a product and/or service to sell and we are going to contact as many prospective customers as we can in the hope that when we contact some, they need or want our offer immediately.

Radio and television advertising fall in the category of hunting for customers. To be effectual, both of these related mediums require a sustained commitment and a significant budget. Why so?

By far, the majority of us now fast forward through television commercial messages. So we only see an advertiser’s message if we inadvertently forget to hit the >> button on the remote. If we do, it’s normally because we’re preoccupied with something other than the TV. Therefore, if we’re not watching, we probably miss this commercial as well. A television campaign must be run for a sustained period of time.

Radio is now a background noise to almost everyone. We have the programming on while we’re otherwise occupied. The easy, affordable availability of music and information we prefer without any commercial breaks is a reality. Therefore, a radio ad must be run hundreds or even thousands of times to effectively catch the attention of our audience.

At their best, radio and television still haven’t captured any revenue. Why not? The last time you heard a commercial message on TV or radio and thought to yourself “I should call them” what telephone number/address/website did they give? Can you remember right now with no memory aid? Probably not. There is something to be said for these mediums in gaining name recognition and establishing branding. This choice is a challenge for a fledgling organization on a shoestring budget.

The other advertising method of hunting for customers is direct mail. This is called “geo-targeted”. Very specific geographical areas are selected for a direct mail campaign. A variation of this is being market specific in your mailing. This is self explanatory.

Once again, our aim is to have our mail piece arrive just at a time when our audience is primed and ready to accept our offer; or will be soon.

This time, our contact information is in print, in their hand. Some innovative advertisers even attach a small magnet to the printed material so it can effortlessly be put on the refrigerator for future reference.

Using TV, radio and/or direct mail will yield opportunities to make your full presentation. That is true whether it’s done one on one, or as a shopping experience associated with a trip to a retail location. Advertising brought this prospect to us. Our marketing and sales skills must be able to “close” the deal with the potential customer.

Historically, the methods of advertising we’ve identified as “hunting for customers” yield a response of approximately 1%. This is normal and acceptable performance. Simply stated, for every 100 people our message reaches, 1 will afford us the opportunity to present our offer.

Then we apply a factor to the number of respondents. It is our closing ratio. If we are an excellent sales and marketing organization, we will typically close 6 out of 10 opportunities we are given to present our offer.

To keep the math simple, let’s say we reach 1000 people with our message. Our advertising campaign should have produced 10 responses. We can make 10 presentations; or our retail location has 10 new visitors from our advertising effort. When we close 6 of those, we have seen a 0.6% return on that effort. We should have made 6 sales while reaching 1,000 people.

There are more intricacies and nuances to the advertising mediums mentioned above, but these are the basics.

Being Hunted by Customers with Advertising

Due to a paradigm shift regarding personal safety, rising fuel costs and consumer awareness, a modern phenomenon is occurring. It’s called “cocooning”. Families and individuals are staying in their homes more where they feel a degree of safety and security. The days of going window shopping or for a Sunday drive are gone forever. The pace and cost of life doesn’t allow for a single wasted movement. So why you should advertise in a recession or any other economic environment takes on even more significance. Let’s drill down into this and explore it.

Let’s use an easy to follow example. If one of our major appliances suddenly and unexpectedly experienced a permanent failure, what would we do? For the sake of this exercise, let’s make it our refrigerator. We can delay the replacement of many other appliances, but not the fridge. So we must research, locate, purchase and install a new refrigerator today.

What does the modern family do in this process? Do we jump in the car and travel all over the area until we find the perfect replacement refrigerator and arrange for a friend to meet us at the store with a pick up truck to take it home with us? That’s what we used to do, not too long ago.

Then along came the Business section of the phone book. We learned to let our fingers do the walking. We could visit dozens of appliance stores in a short time and even make our best deal with the friendliest salesperson we’d met via the phone system. Of course, we still had to make the trip to the location to see this perfect appliance in person and make the payment so we could follow their delivery truck back to our house, let them install the new fridge, dispose of the old one and we could get back to the business of life.

The Yellow Pages created a new approach to advertising: Let the customer hunt for the advertiser. That means simply that when someone opened the phone book to look for an appliance store, they were a buyer. Typically with an immediate need.

Since the 1980’s when home computers became available and affordable, and internet providers brought their services to residential neighborhoods, life has taken another surprising turn.

Today, if our fridge went on the fritz, we wouldn’t even look for the phone book. We’d simply launch our favorite web browser and enter the key word “refrigerators”. Very likely, we’d have upwards of 100,000 possible places to look online. This is a great situation for the consumer. This is even better for the business owner; this buyer is hunting for you with an immediate need. Still, how many of us get past the first page or two of the listings?

Here’s the question business owners must address: since there are 100,000 options, how does a company earn and retain a top position in the listings? If we are a brick and mortar business, how do we “geo-target” our efforts to effectively advertise and market our retail location(s) to the families in our service area(s)?

Unless Search Engine Optimization (SEO) and Keyword Efficiency Index (KEI) analysis are a couple of our core competencies, this whole concept is very intimidating. Many companies have a presence on the internet, but can’t proficiently “drive traffic to their site”.

The good news is that there are people available to share their knowledge of how to execute a successful internet marketing program. Many of these mentors are willing to offer the coaching programs they have at their disposal to business owners and/or one of their staff members. Think of what that could mean. As market conditions change, as the economy experiences any one of its many moods or cycles, you and your organization would be prepared with an existing program to keep your name in front of your ideal client with a minimum of “tweaking”. A surprisingly small amount of time is needed monthly to maintain a well “connected” program. And best of all, almost all of the sites that create your high profile status, allow free posting of your information.

How would the return on effort look using this model? If you remember, we looked at the typical return of effort of traditional advertising methods. Let’s use the same numbers to determine the opportunities earned when your customer is hunting you due to an existing need.

In our previous example, we said your advertising message was sent to 1,000 people. As we applied the 1% response and the 6 out of 10 close ratio you enjoy, we saw a 0.6% return on your effort since you interacted with 10 people that responded to your effort and you made 6 sales while reaching 1,000 people.

Here is the “customer hunting you” scenario. When 1,000 people click your ad on the first page of their browser, for all practical purposes, 100% of them are ready to see your presentation. They’re looking for you. You will now have 1000 opportunities to make your presentation. If your same 6 out of 10 closing ratio is maintained, the return on your effort is 60%. That would translate to 600 sales out of 1,000 responses. This information is quite exciting to most owners and managers.

Let’s face facts: internet marketing is not a passing fad. It is here to stay for the foreseeable future. Consumers are spending less and that’s why you should advertise during a recession, to capture your fair share of the available market. They’re also educating themselves on the internet. That’s why you should advertise on the internet regardless of the economic environment.

It’s time to assign someone in your organization to be mentored and coached in the best practices associated with internet marketing. It will be a pleasant surprise to find how much control you can regain of your own economic future.

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