When Cutting Costs, Skip Advertising

penniesWhile many people say that we are slowly coming out of our recession, many small business owners will disagree. Times are tight and making money in the small business arena is just as difficult as ever.

When finances are low, some businesses may take steps to save. One of the areas that suffer from this is usually marketing and advertising. It is, after all, one of the most obvious places to cut spending when times are rough.

But this can actually be dangerous. In fact, history has shown that investing more money into advertising during financial hardships can be beyond rewarding.

We can look to Nike for a great example. In 1987, the stock market had crashed. A huge number of businesses—both small and large—felt the pinch of the resulting recession. But Nike took this crisis to invest more in their marketing; they actually tripled the cost of their marketing while others were being more cautious.

The result? When the recession came to an end, Nike’s profits were nine times higher than they were when the stock market crash occurred.

Many people also see this crash as the time in history where McDonald’s lost much of its market lead and never quite regained it. See, while McDonald’s was playing it safe and actually cutting back on their advertising, chains like Pizza Hut and Taco Bell followed Nike’s example—although not by as much—and came out of the recession as a much stronger competitor to McDonald’s.

So when you see a tight space coming in terms of finances and need to find solutions, it’s plain to s hat marketing and advertising are not where you should be making cuts. If you cut your advertising and marketing, you lessen your impact on audiences and weaken your connection.

However, by investing more in marketing and advertising during times when you competition is drawing back a bit, you stand to reach new customers like never before.

Have you made plans to budget for your advertising and marketing efforts in the event of a financial crisis?

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