Skimping On Your Ad Budget Will Cost You in the Long Haul


When your business is failing and you are struggling to meet your expenses, what’s the most obvious solution? An overwhelming majority of companies hurt by the credit crunch would agree that the only way to save money is to do one of three things: cut expenses, cut expenses, or, surprisingly, cut expenses. Advertising budgets are slashed, and companies quickly revert to “survival mode” in hopes of riding out the hard times. Oftentimes, this decision may seem like a strategic one at first but can have severe ramifications in the future.

Take Pizza Hut and Taco Bell for example. During the 1989-1990 recessionary period, these fast food chains experienced a growth in sales of 61% and 40%, respectively. During the same time period, McDonald’s sales figures were reduced by 28%. You might ask why? While the high cholesterol concerns of McDonalds double cheese burgers certainly was partly to blame, the company’s primary downfall had much to do with its inability and unwillingness to rise up in the face of competition. Because advertising is deemed to be a “dispensable luxury” for so many companies during recessionary time periods, it often becomes the first to go. Both Pizza Hut and Taco Bell, however, recognized the competitive advantage they could achieve by increasing their advertising budgets to gain greater visibility and build brand equity. On the other hand, McDonalds felt that its name has penetrated the marketplace to such an extent that any additional advertising was a complete waste. Because Pizza Hut and Taco Bell faced limited competition from other fast food chains unwilling to beef up their marketing efforts, their advertising messages carried greater weight in the marketplace.

During tough economic times, there is no doubt that certain expenses should be cut. However, advertising is not one of them. If big name brands still need the exposure, what makes you think you think you can escape the cost of advertising? Try to distribute your advertising dollars toward multiple, cost-effective marketing platforms to achieve the greatest exposure of your product or service offerings. Try SEO. Try Google AdWords. Try email marketing. Just don’t try nothing.

Look at recessions as an opportunity for business growth. By not advertising, you might be saving money now, but you are diminishing your brand reputation in the future. Because product and service sales are so crucial toward your bottom line, it is important that you get noticed. Let your competition fade out in the background so that you can make an appearance.

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