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Advertise During Economic Downturns: Opportunity For Expanding Your Market Share

After three months of conversations with dealers this year, I know there is a lot of pessimism out there that 2007 will be a down year. With all of the current media discussion of housing market bubbles, sub-prime mortgage fall-out, and possible recession in the economy, it’s probably time to consider what to do should a real economic downturn hit.

History has shown businesses across all industries, that maintain or increase their advertising investments in periods of economic downturns increase their sales and share of market, both during and after the downturn. I want you to see opportunity where others see crisis. I believe it’s an expansion opportunity to be seized, not a moment to fall back into a bunker and wait out the barrage of gunfire. There is too much at risk to head towards the marketing sidelines. Maintaining or increasing advertising budget levels during economic downturns is a necessity in terms of protecting market share position because you will face forward looking competitors in this type of an economic environment. 

During the recession of 2001, U.S. automakers pulled out all the stops to attract car buyers, offering a broad range of incentives including zero-interest loans, rebates and leasing options. This lead to four years of solid growth prior to rising interest rates and gasoline prices over the past 12 months, so let’s take a page from the manufacturers’ playbook. 

In advertising there is also something called Share of Mind you must consider. Share of Mind is consumer awareness about a product or brand that allows the brand name to be used for all types of that product (e.g. Kleenex being used to describe all facial tissues.) It is the recognition factor and Top of Mind Awareness (keeping a brand name forefront in a consumer’s mind) you have worked so hard to create in the customers in your market. If you fail to maintain your Share of Mind during an economic downturn, current and future sales are in jeopardy. This maintenance costs much less than rebuilding it later. This is something I know most dealers don’t consider.

Advertising through both bull and bear markets sustains the necessary recognition and market share. Your dealership will look like a beacon of stability in an uncertain marketplace, giving you the opportunity to dominate a space. Though manufacturers may not take the same approach in 2007 as they did in 2001, I think it was a very sound strategy 6 years ago and obviously bore fruit. This is why I think dealers should consider taking this approach in 2007.

So many marketing opportunities exist during economic downturns that you won’t find in bull markets. For example, you will find lower advertising rates. During any economic downturn, certain dealers will decide to (or be forced to) cut back on their advertising budgets. If you have the resources to maintain or even increase your own budget, you may be able to use the economy's overall decline to negotiate significantly lower advertising rates. Newspapers, magazines, radio and TV stations will all experience a decline in the number of businesses purchasing advertising.

Take advantage of this by negotiating the best possible rates, and consider establishing long-term contracts during this time to take maximum advantage of the bargain. Advertisers are hit hard during an economic slump. Many are willing to negotiate a special discount to keep your business or to get it away from their competitors. Take the initiative when you’re placing an ad. Ask for a discount or a bigger discount than one already offered. Look to the future during bad times because you want to make the most of today but even more out of tomorrow. Take business away from less aggressive competitors and position yourself for future growth both during and after the recovery. Strengthen the mediums you already do business in to accomplish this goal.

When times are good you SHOULD advertise but when times are bad you MUST advertise. Advertising during the downturn should have a direct effect on the bottom line but should not be a drain on profits. Go out there and take a bite out of the market share when others are running and hiding. You will reap the rewards far into the future if you maintain the consistent aggressive approach you established during the bad times.

While other dealers reduce during a recession or soft market, the contrarian dealer thinks expansion. When other dealers cut back on marketing and advertising, they are surrendering potential market share. Take advantage of your competitor’s diminishing market share by doubling up on anything that is working even marginally well for you right now. There is share to be gained in all of your marketing and promotional efforts while others “hunker down.” During a downturn, cut back in every other facet of your business except marketing. Think of the downturn as the opportunity of the decade, because often times it is.

The forward thinking dealer should always be ready for a downturn. When a recession strikes, an entrepreneur must be prepared to seize the opportunity for expanded market share. When other businesses are pulling back, it's time for your company to move in and fill the void.

Vol 5, Issue 6


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