There is a lot of talk in the news these days about recession. Some economists are gloomily predicting another depression. Maybe that will happen. Maybe it won’t. Either way, if you are willing to learn from the past your business can thrive… even in challenging economic circumstances.

Don’t Cut Your Advertising Budget

When the economy gets tight and your sales are getting harder to make, you might start thinking about reducing your ad budget “just ‘til things get better”. That’s not a good idea. In fact, that might be your first step toward bankruptcy.

To begin, the Great Depression was not all was gloom and doom. It was a time when those who knew what they were doing made great economic strides and the very nature of the depression itself was an economic boon for them. It was a time when companies benefited from aggressive marketing while their rivals cut back. A good example of that would be Kellogg overtaking C.W. Post during that time. Consumers didn’t totally stop spending during the depression any more than consumers today are going to totally stop spending. Most just looked for better deals and the companies providing those better deals came out stronger after the depression ended. When spending picked up, consumer loyalty to those companies remained. There is no reason to expect anything different as we move through the current economic difficulties.

In general, those companies who not only survived but did well and grew during the Great Depression are those who continued to act as though there were nothing wrong and that the public had money to spend. In other words, they advertised. They created demand even during the most difficult of times.

Many companies cut spending during that era, almost eliminating their advertising budgets. These companies actually dropped out of public sight because of short sighted decisions made about spending money to keep a high profile. Their advertising cutbacks caused many customers to feel abandoned and associated the effected brands with a lack of staying power. This not only drove customers to more aggressive competitors but caused a certain amount of mistrust when it came to financial investors considering making additional investments in these no longer visible companies.

Historical evidence supports the case that advertising was the main factor in the growth or downfall of companies during those years. Clearly, the companies which demonstrated the most growth and which rang up the most sales were those which advertised heavily. The Great Depression offers classic examples of the power of advertising even during times of economic crisis.

As an example, there were 108 companies manufacturing automobiles in the United States during 1924. By 1936, the “big three” (Ford, Chrysler and GM) held 90% of the US car market. They survived by expanding their advertising. Chevrolet was particularly aggressive. During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and by 1931, the “Chevy 6″ took the lead in its field and remained there for the next five years.
So, if we look back to the past and learn from those who succeeded and even prospered in some of the toughest economic times of recent history, here are a few things you can do: …To be continued…