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Your COVID-19 Battle Plan - Part 1/2

Getting strategy right in recession communications - this is a summary of the paper published by Akyüz and Ercilasun out of Beykent University in 2014

The Role of Advertising during Recession

The authors Dr Ayşen Akyüz and Dr. Mustafa Ercilasun from the Turkish Beykent University lay down a purely economic analysis of advertising during a recession. The authors stress the importance of defining a recession more broadly than the textbook definition of ‘a downturn in economic activity’. Akyüz and Ercilasun advise a more nuanced analysis, taking into account employment shifts, industrial production, real income and sales,to develop a rubik that more clearly describes the beginnings and ends of economic cycles. The overall contention asserts that maintaining advertising budgets is a wise choice for business leaders during a recession, citing evidence from previous recessions that showed companies that continued advertising saw an increase in sales growth and market share throughout and after the recession. The paper advises businesses to not ‘fall into a trap’ of reducing advertising budgets during a recession without a careful analysis of the competitive landscape. While businesses may view a recession as a period which relegates marketing to a purely tactical exercise – where liquidity and budget cuts become a priority – Akyüz and Ercilasun advise taking a moment to view the circumstances as a strategic opportunity. In a recession the market is weakened, your potential customers are losing brand loyalty for your competitors and you have the opportunity to be the only voice within a category. Particularly for smaller brands, this offers an enormous chance to decrease the marginal cost of acquiring new customers through advertising. But only while the iron is hot.

Key Points

  • The authors’ literature review on the relationship between advertising and business health during a recession reveals a fairly central consensus among marketing and economics academics that firms should maintain or increase their marketing budgets during a recession

  • The definition of a recession remains slightly contentious among economists, however the authors advise taking a holistic view which includes labour shifts, changes in industrial production and other factors

  • Not only are businesses that do not advertise during a recession acting against the interest of their bottom lines, they are missing out on the opportunity to cheaply acquire a new segment of market share while their competitors remain quiet

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