What's the biggest mistake business make in an economic downturn

Faced with an economic downturn, many businesses cut advertising and marketing spend. But it's their biggest commercial mistake.

The Financial Times have just launched a very unusual poster/bill-board campaign in which the bill-boards have been stripped back to the bare boards and with just a small copy panel posing the question: "Global downturn. What's the first mistake businesses make?"

The posters direct people to a page on the FT website www.ft.com/budgets which includes details on a number of Independent studies that all show that advertising in a downturn gives you increased share of voice, increased market share and increased profitability over time. Here are some of the highlights:

McKinsey study:


The companies who increased their spend in a recession were the only ones whose profits rose substantially when the economy recovered.
Read the McKinsey study

Patrick Barwise, London Business School Professor of Management & Marketing:


The advantages of maintaining or increasing marketing effort are greater than the short-term benefits of reducing spend.
Read Patrick Barwise's report

Hillier analysis of 1,000 companies on the PIMS (Profit Impact on Market Strategy) database after the early 1990s recession:


The companies who had cut their marketing budgets saw ROCE (return on capital employed) decline by 0.8% after the recession.

Those who increased their marketing activity saw an increase of 4.3%.
McGraw-Hill research, analysing 600 companies from 1980-1985:


The sales of companies who had kept advertising during the 81-82 recession had risen 256% over those who had not.

In every recession of the past 90 years, independent studies show that the businesses who increase their advertising spend are the ones who survive the tough times and thrive afterwards.

Still planning to cut that spend???