The conventional wisdom in marketing circles is that during a recession, the best thing you can do for your brand is to increase your advertising spend. So who has actually done that?
According to major media spending data from The Nielsen Co., marketers in categories such as fast food, telecom, insurance, lending and cable/satellite TV spent more on advertising in the first eight months of 2009 then they did in the same period in 2008. This is due, in part, to the seizing of opportunities created by the recession, including cheaper ad rates and consumers hungry for bargains, said marketers and media buyers.
Adweek parent Nielsen estimates that total media spending, excluding online, declined 12 percent to $66.1 billion for the period. The overall pullback in spending in the U.S. has created a softer ad market, particularly in TV, which enables brands that loosen their purse strings to stand out.
Other reasons include brand relaunches, new product introductions and advertising behind an acquisition. Bank of America, for example, spent more than $21 million through August -- up from $88,000 in the like period last year -- to relaunch its home mortgage business following its acquisition of Countrywide Financial. "It was important for us...to make sure that we were generating the awareness and building the equity around responsible lending and successful home ownership," said Ray Chinn, head of home loans and insurance marketing at the bank.
Many companies clearly have been opportunistic by upping spending in a downturn, as consumer habits change in the face of high unemployment, lower wages and declining real-estate values. "The media/economic environment has allowed us to get more bang for our media buck," said Tim McIntyre, vp of communications at Domino’s Pizza, whose major media spending jumped 31 percent in the first eight months of ‘09 to more than $111 million, according to Nielsen.
Other players in the fast-food realm, including McDonald's, Subway, Burger King, Papa John’s, Popeye’s and El Pollo Loco also increased their outlays in that period. McDonald's spending climbed 6 percent to $575 million and Burger King’s 3 percent to $173 million, per Nielsen.
Media buyers attributed the trend largely to these restaurants looking to capitalize on consumers who are looking to trade down from sit-down chains such as T.G.I. Friday's and Applebee's. McDonald's and others "are a really good solution in this economy," said Barry Lowenthal, president of MDC Partners' The Media Kitchen in New York. The category also has new offerings and price battles, said Peter Gardiner, chief media officer at Interpublic Group's Deutsch in New York. There's Subway’s $5 sub offer "which everybody has mimicked," Gardiner said. "Also, you’ve got the [chicken] wing wars."
Spending upticks in the cable/satellite TV space stemmed partly from marketers trying to capitalize on consumer nesting, said a source. At the same time, competition has intensified as consumers who already have providers consider a switch. "It's a share game," Gardiner said. "The battle would be going on" with or without a recession.
Verizon, for one, has made a significant bet on switchers with its long-term investment in its FiOS TV service. In the January to August period, spending on Verizon FiOS jumped 31 percent to more than $136 million, per Nielsen. Other major service providers also experienced percentage increases in this time period, including Cablevision (55 percent), Dish Network (53 percent) and Comcast (52 percent).
Verizon also is an impact spender in the wireless services sector, where marketers of all sizes poured more money into the marketplace. Boost Mobile’s jump from $814,800 last year through August to more than $32 million this year during the same period coincided with a brand repositioning from a teen to a mainstream focus. Said CMO Neil Lindsay, the company adjusted its media plan from a heavy reliance on cable channels such as MTV to more expensive network TV.
And while planning for the strategic shift began before the onset of the recession, the downturn actually helped. "It made prepaid more interesting," Lindsay said. "People were afraid to make a commitment to a cell phone company because they might lose their jobs. I wouldn’t say it was fortuitous because there’s nothing fortuitous about what's going on now. But it was a catalyst."
— with Todd Wasserman
— Nielsen Business Media