When you Don't Advertise

take a look at the damage done:

Survey Indicates That Reducing Advertising in a Recession is a Mistake

More than 48 percent of U.S. adults believe that a lack of advertising by a retail store, bank or auto dealership during a recession indicates that the business is likely struggling, according to a study from Ad-ology Research.

At the same time, a large majority of consumers think businesses that continue to advertise are competitive and/or committed to doing business.

The research study, "Advertising's Impact in a Soft Economy," which was undertaken to determine whether stopping advertising during the recession could harm a business, takes an in-depth look at specific consumer perceptions regarding firms that continue to advertise in the current economy, as well as those that do not.

Not advertising can harm brand
Advertising appears to play a key role in consumers' view of how a business is doing, the study found. By not advertising, businesses may be sending a warning signal to current and potential customers, Ad-ology said.

For example, when consumers no longer see/hear advertising from an auto dealership during a down economy, 50 percent say they view the dealership as "struggling." In addition, 19 percent feel these dealers are "less willing to deal," and only 7 percent believe they "must be doing well."

On the other hand, when a dealership advertises during tough times, 34 percent believe the dealership to be committed to doing business.

Consumer perception is similar for stores and banks. When advertising ceases among the following businesses, consumers:

* View their bank as struggling (48 percent)

* Believe their bank may not be in business much longer (12 percent)

* View their favorite store as struggling (56 percent)

* Believe their favorite store may not be in business much longer (15 percent)

However, when the following businesses continue to advertise frequently, consumers:

* Believe their bank is committed to doing business (43 percent)

* View their bank as being competitive (30 percent)

* Believe their favorite store is committed to doing business (47 percent)

* View their favorite store as being competitive (30 percent)

"It is critical to advertise in the current economic climate, to maintain long-term positive consumer perception of your brand," said C. Lee Smith, president and CEO of Ad-ology Research. "Advertising not only assures consumers of a business' reliability in a soft economy, but it can influence where and what they buy, especially when the ads address concerns about value."

(Source: Marketing Charts, 05/25/09)

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