A quantatative argument for advertising when times are tough

by drm on July 7, 2009

What happens when you cut advertising?

Common sense tells you that your sales volume will drop. But, according to ThinkVine, an analytics firm, when you turn your advertising spend back on, you’d better be prepared for sales to remain lower.

The impact speaks to the impact of sustained advertising: you increase consumer recognition and awareness of your product or service, which allows you to maintain or increase market share.

Advertising may feel like a variable expense. But research like this shows that it’s really a fixed cost.
clipped from adage.com
What Happens If You Cut Media Spending?


ThinkVine uses correlation analysis* and sales data. But it bases its predictions on the makeup of each brand’s consumers, including detailed data on the media and spending habits of various consumer segments. It then crunches as many as a trillion data points for each forecast.
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  • http://twitter.com/OlegR Oleg R

    business school marketing 101 – brand equity is hard to build and easy to lose.
    It's like with cars- starting up the engine takes much more fuel than just to keep it running. Thus frequently shutting down the engine for short stops will not pay off in the long run.

    Dan, this all seems to be true in the b2c business. What is your experience with b2b's cutting their marketing budgets?

    -Oleg
    (twitter – @OlegR)

  • http://twitter.com/OlegR Oleg R

    business school marketing 101 – brand equity is hard to build and easy to lose.
    It's like with cars- starting up the engine takes much more fuel than just to keep it running. Thus frequently shutting down the engine for short stops will not pay off in the long run.

    Dan, this all seems to be true in the b2c business. What is your experience with b2b's cutting their marketing budgets?

    -Oleg
    (twitter – @OlegR)

  • http://www.nci.com drm

    In some ways the impact in b-to-b is more profound, because business customers have a clear picture of who’s out for their business and who isn’t, and if there’s a big disruption in marketing, then it sets of red flags. That said, the analysis doesn’t take into account the new generation of business content marketing — white papers, business networks, etc. — that can keep a brand in front of prospects and customers without investing heavily in traditional display advertising.

  • http://twitter.com/OlegR Oleg R

    business school marketing 101 – brand equity is hard to build and easy to lose.
    It's like with cars- starting up the engine takes much more fuel than just to keep it running. Thus frequently shutting down the engine for short stops will not pay off in the long run.

    Dan, this all seems to be true in the b2c business. What is your experience with b2b's cutting their marketing budgets?

    -Oleg
    (twitter – @OlegR)