The Recession: Problem or Opportunity?
In a meeting a few days ago, our director of media & research, Jeff Davis, remarked that he was seeing the lowest prices from media in many years. He said the bargains out there are astounding. The reasons, of course, are obvious. Advertisers are pulling back and the principle of supply and demand is kicking in.

Lower media costs are just one advantage marketers can find in a recession. A Knowledge@Wharton communication recently quoted one marketer as saying a recession can be an “opportunity disguised as a problem.” Unfortunately, few executives see it that way.

When it comes to the recession, hospitals are no different than other businesses. The first reaction of most executives is to cut advertising. The problem is that’s a short-term fix with serious long-term consequences. Advertising isn’t the typical expense most CFOs see, it’s an investment.

What research says about advertising in a recession
There is ample research showing companies who maintain or increase their advertising during a recession do much better than those who don’t. Consider these studies:

• During the Great Depression, Kellogg brands doubled their advertising budget, while rival Post cut its advertising. By 1933, Kellogg’s profits had risen 33 percent and they have dominated the dry cereal market ever since;¹
• The Harvard Business Press found that airlines that increased their advertising during 1974-75 increased sales and market share in both years, while those who cut advertising both years lost sales and share;²
• A McGraw-Hill study of 600 companies found that companies that cut advertising during the 1981-82 recession increased sales by only 19 percent between 1980 and 1985, while companies that continued to advertise in 1981-82 increased sales 275 percent!²
• In a report of a survey of AMA members during the 1990-91 recession entitled “Fortune Follows the Brave”, Management Review found that firms that increased marketing budgets and took on new people were twice as likely to pick up market share;³

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