Post-holiday bargains may have been too good for shoppers to pass up as January retail sales increased slightly over the previous month. According to the National Retail Federation, retail industry sales for January (which exclude automobiles, gas stations, and restaurants) increased 0.5% seasonally adjusted from last month and decreased 2.1% unadjusted year-over-year.
January retail sales released by the Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 1.0% seasonally adjusted from December but decreased 9.0% unadjusted year-over-year.
“While 2009 got off to a surprising start, it’s going to be difficult for retailers to maintain this momentum,” said NRF Chief Economist Rosalind Wells. “We expect the first half of the year to present challenges while giving way to sustained growth in the fourth quarter.”
While seasonal increases were encouraging for retailers, budget-conscious consumers still spent much less this year compared to last January. Electronic and appliance stores sales increased 2.6% seasonally adjusted from last month but decreased 7.4% unadjusted year-over-year. Sales at clothing and clothing accessories stores increased 1.6% seasonally adjusted from December and decreased 8.0% unadjusted over last January.
As shoppers continued to save more and spend less, they continue to spend on the necessities. General merchandise stores sales increased 1.1% seasonally adjusted over last month and 3.5% unadjusted over last year. Additionally, health and personal care stores sales were flat seasonally adjusted month-to-month and increased 3.5% unadjusted year-over-year.
Saturday, February 28, 2009
ADULT RADIO LISTENERS AND DOCTORS
A new report from The Media Audit reveals that men spend nearly 18% more on prescription drugs and spend nearly 14% less on physician's services in the typical year, compared to women. According to the report, the average annual expenditure on prescription drugs for men is $2,095 compared to $1,780 for women. Additionally, men spend an average of $994 per year on physicians' services, compared to $1,155 for women.
The same study reveals that adults age 50+ spend 45% more on non-prescription vitamins compared to adults who are between the ages of 18 and 49. According to the report, the average annual expenditure for vitamins for adults fifty and over is $590 compared to $406 for adults between the ages of 18 and 49. Adults fifty and over also out-spend their younger counterparts on both prescription and non-prescription drugs, dental services, and physicians' services.
Data was compiled from The Media Audit's National Consumer Buying Power Report, which is also available in the form of a local report for 88 measured markets. When analyzing data from a local Consumer Buying Power Report, users are able to compare spending habits of different media audiences, thereby using buying power as a means for comparison.
Nationally, consumers who are heavily exposed to outdoor advertising and the Internet spend the most per year on prescription drugs. According to the report, the average annual expenditure among adults heavily exposed to outdoor is $2,085 per year and $2,059 for heavy internet users. Adults who are heavily exposed to direct mail spend $1,860 per year on prescription drugs, the least amount of money per year compared to other media audiences. Newspaper, radio and television audiences fall somewhere in the middle.
Conversely, adults who are heavily exposed to radio and direct mail spend the most money per year on physicians' services. According to the data, the average annual expenditure on physicians' services among heavy radio listeners is $1,095 per year and $1,084 for heavy direct mail users. Adults who are heavily exposed to TV spend $1,051 per year on physicians' services, the least amount compared to other media audiences.
The same study reveals that adults age 50+ spend 45% more on non-prescription vitamins compared to adults who are between the ages of 18 and 49. According to the report, the average annual expenditure for vitamins for adults fifty and over is $590 compared to $406 for adults between the ages of 18 and 49. Adults fifty and over also out-spend their younger counterparts on both prescription and non-prescription drugs, dental services, and physicians' services.
Data was compiled from The Media Audit's National Consumer Buying Power Report, which is also available in the form of a local report for 88 measured markets. When analyzing data from a local Consumer Buying Power Report, users are able to compare spending habits of different media audiences, thereby using buying power as a means for comparison.
Nationally, consumers who are heavily exposed to outdoor advertising and the Internet spend the most per year on prescription drugs. According to the report, the average annual expenditure among adults heavily exposed to outdoor is $2,085 per year and $2,059 for heavy internet users. Adults who are heavily exposed to direct mail spend $1,860 per year on prescription drugs, the least amount of money per year compared to other media audiences. Newspaper, radio and television audiences fall somewhere in the middle.
Conversely, adults who are heavily exposed to radio and direct mail spend the most money per year on physicians' services. According to the data, the average annual expenditure on physicians' services among heavy radio listeners is $1,095 per year and $1,084 for heavy direct mail users. Adults who are heavily exposed to TV spend $1,051 per year on physicians' services, the least amount compared to other media audiences.
CAN RADIO HANG ON?
Radio companies have gone through a rugged 2008, not to mention rugged years pretty much since Y2K and the bursting of the dot-com bubble. And 2009 is looking like more of the same. But a number of crystal ball readers see the business starting to at the very least level out in a couple of years, unlike, say, newspapers. The good news for radio, according to observers at TNS Intelligence, is that a lot of radio’s trouble is not because radio is radio, it’s because of what’s happening around the industry – not only is the economy sucking wind, but two of radio’s biggest clients, automobiles and financial companies, are sucking wind at hurricane and tornado levels.It is expected that the economy will eventually come back, some of radio’s core categories will come back and eventually replacement clients will be found for some those categories that are gone for good.The return of at least some business, coupled with reduced local competition (particularly from newspapers), lower overhead related to the cuts going on now, and better revenue generation from associated online operations, are expected to help radio at least find a flat space by 2011.RBR/TVBR observation: Hey – it’s a light at the end of the tunnel! The stations that do the best job of maintaining their bond with their local audiences are going to be the ones that get first pick of the fruited plains on the outside of this bleak cavern.
LEARNING TO DO SMARTER SEARCHES IN GOOGLE
If you are like most television station people, Google.com is your constant companion in the search for relevant information. Surprisingly, most people have never really taken the time to learn to use this powerful tool effectively. Implementing a few simple tricks can hone your searches, revealing the right information more quickly.
Going to the Second Page is Wasted Time.A lot of people put one or two general words in the search box, then press return. They are then presented with a long list of results, most of which do not match. This is a bad use of your time. The best Google searches do not require scanning page after page of results. You will find what you need faster if you get very specific in your search description, then scan the results to see if you were successful. If what you need is not on the first page, don't go to the second page. Instead, narrow your parameters in the search box and do another query.
Use QuotesQuotes are one of the most powerful tools in Google search. Google starts looking for web pages that contain all the words put in the search box. The terms can be in any order or at any place on the web page. For example, let's say you were looking for the famous Churchill quote, "Success is going from failure to failure without a loss of enthusiasm." Unfortunately, all you remember is the end, ...loss of enthusiasm. If you put this term in the Google search box with no quotes around it, Google looks at all pages that have these three words. This search will yield articles about workplace feminism, a charm blog, and opposition during World War One. If you put "loss of enthusiasm" in quotes, Google looks for instances where those three words appear one after the other, in this precise order. Churchill's quote jumps to the top of the list. Whenever you're searching for a phrase that contains common words, using quotes can increase your chances of success.
Use the Minus SignIf you want Google to skip over pages that contain specific words, put the minus sign in front of those words. For example, if you are searching for the hottest news on Britney Spears, an optimal search would look like this: "Britney Spears" -pickle -weapon -aboriginalThis would eliminate all pages that contain the word spears that discuss the latest trends in dill pickle recipes, medieval weaponry, and native Australian hunting techniques. Remember to avoid excluding common words when using the minus sign. For example, "-the" would exclude most of the web pages in the world.
Use the Plus SignJust as the minus sign eliminates words from a search, the plus sign accentuates words in the search, giving extra weight to pages that have this word. If you were looking for pictures of the planet Neptune, your search might look like this:Neptune planet +photo -god -roman -horseThis would weight the search towards astronomy sites with photos, and away from horse racing and Roman mythology.
Use OrThere are times you don't want Google looking for all the terms in the search, but for any of the terms in the search. For example, let's say you are looking for the latest information on crime in metro Boston. Naturally, you would include Boston in your search, but you would also want to include the names of the other neighboring communities. You might enter the search as:"Crime Statistics" Boston Brookline SomervilleBut this would only find pages that contain the names of all three communities. By using the or command, your search would be more accurate because it would bring up pages that contain crime statistics on Somerville, where Boston and Brookline are not mentioned. So the more successful search would look like this:"Crime Statistics" Boston or Brookline or SomervilleThis would bring up all pages that contain information on each of these individual communities.
Use the Tilden SignThis is the little squiggly (~) character right beside the "1" key. There are times when you are looking for something, but don't know quite what to call it. Let's say you're looking for information on corruption in Congress. Where do you start? You don't know whether to search Senate, House, Congress or committee. Putting the tilden in front of the word signifies that you're looking for "words similar to this." Google will include synonyms to those words, expanding your search.
These are just a few of the simple ways you can optimize your searches. That little Google search box has many more tricks in store for you.
Going to the Second Page is Wasted Time.A lot of people put one or two general words in the search box, then press return. They are then presented with a long list of results, most of which do not match. This is a bad use of your time. The best Google searches do not require scanning page after page of results. You will find what you need faster if you get very specific in your search description, then scan the results to see if you were successful. If what you need is not on the first page, don't go to the second page. Instead, narrow your parameters in the search box and do another query.
Use QuotesQuotes are one of the most powerful tools in Google search. Google starts looking for web pages that contain all the words put in the search box. The terms can be in any order or at any place on the web page. For example, let's say you were looking for the famous Churchill quote, "Success is going from failure to failure without a loss of enthusiasm." Unfortunately, all you remember is the end, ...loss of enthusiasm. If you put this term in the Google search box with no quotes around it, Google looks at all pages that have these three words. This search will yield articles about workplace feminism, a charm blog, and opposition during World War One. If you put "loss of enthusiasm" in quotes, Google looks for instances where those three words appear one after the other, in this precise order. Churchill's quote jumps to the top of the list. Whenever you're searching for a phrase that contains common words, using quotes can increase your chances of success.
Use the Minus SignIf you want Google to skip over pages that contain specific words, put the minus sign in front of those words. For example, if you are searching for the hottest news on Britney Spears, an optimal search would look like this: "Britney Spears" -pickle -weapon -aboriginalThis would eliminate all pages that contain the word spears that discuss the latest trends in dill pickle recipes, medieval weaponry, and native Australian hunting techniques. Remember to avoid excluding common words when using the minus sign. For example, "-the" would exclude most of the web pages in the world.
Use the Plus SignJust as the minus sign eliminates words from a search, the plus sign accentuates words in the search, giving extra weight to pages that have this word. If you were looking for pictures of the planet Neptune, your search might look like this:Neptune planet +photo -god -roman -horseThis would weight the search towards astronomy sites with photos, and away from horse racing and Roman mythology.
Use OrThere are times you don't want Google looking for all the terms in the search, but for any of the terms in the search. For example, let's say you are looking for the latest information on crime in metro Boston. Naturally, you would include Boston in your search, but you would also want to include the names of the other neighboring communities. You might enter the search as:"Crime Statistics" Boston Brookline SomervilleBut this would only find pages that contain the names of all three communities. By using the or command, your search would be more accurate because it would bring up pages that contain crime statistics on Somerville, where Boston and Brookline are not mentioned. So the more successful search would look like this:"Crime Statistics" Boston or Brookline or SomervilleThis would bring up all pages that contain information on each of these individual communities.
Use the Tilden SignThis is the little squiggly (~) character right beside the "1" key. There are times when you are looking for something, but don't know quite what to call it. Let's say you're looking for information on corruption in Congress. Where do you start? You don't know whether to search Senate, House, Congress or committee. Putting the tilden in front of the word signifies that you're looking for "words similar to this." Google will include synonyms to those words, expanding your search.
These are just a few of the simple ways you can optimize your searches. That little Google search box has many more tricks in store for you.
GIVE YOURSELF A PROMOTION
We scan the horizon for news and information every day – and it’s amazing how many times we come across people and companies warning other people and companies to resist the natural urge to scale back promotional activity during tough times. In fact, taking the opposite tack is so widely recommended it’s amazing that down times for the general economy are not boom times for advertising-related businesses.When things are going good in general, there are still winners and losers in every business category, and the problem for all of them is cutting through the marketing clutter. This is especially true during a time in history when any flat surface seems to be seen as a potential advertising venue, from the floors in stores to the foreheads of private citizens willing to display a temporary tattoo for some product of service.The misguided but natural inclination to cut marketing takes care of the clutter problem automatically, leaving the field to those bold enough to stay in the game.Canadian company Infinity Communications is another with a list of ideas designed to assist both companies and individuals surf through the choppy waters of the current economy. Here are five points Infinity co-CEO Leanne Bucaro puts forth for your consideration:1. Use Technology. Get the word out by joining social networks like Twitter, Facebook and My Space, or create your very own website.2. Nurture Relationships. Join groups and associations, volunteer in your community, contact old and new friends and network, network and network!3. Know Your Product...even if your product is yourself! Then you can sell yourself or your business with confidence.4. Be Creative. Think outside the box, come up with an angle or dare we say, even a gimmick. Stand out in your field!5. Be Resilient. Don't take "no" personally, your services or products may just not be needed, it doesn't mean you're not liked. Let a rejection inspire you to move on to the next opportunity and prove past naysayers wrong!
Tuesday, February 17, 2009
STIMULUS PACKAGE
Will You Feel the Benefit of the Stimulus Package? Find Out Here
Where That $787 Billion Is Going -- and Who Stands to Gain
By Bradley Johnson and Ira Teinowitz Published: February 16, 2009
LOS ANGELES (AdAge.com) -- Pass the bucks.
The American Recovery and Reinvestment Act of 2009, approved by Congress last week, will try to rescue the economy with an unprecedented $787 billion package of government spending and tax cuts.
Spending is expected to account for nearly three-fourths of the package; tax cuts will make up the rest. The bill is loaded with public-works projects; green initiatives (such as incentives for renewable energy and energy efficiency); and money for the social safety net, education and myriad federal and state programs.
If this jump-starts the stalled economy, then consumers and business stand to benefit regardless of how specifics of the plan -- a home buyer's credit, say -- directly affect them. The economic-stimulus bill also helps the unemployed through extended jobless benefits and subsidies on health-insurance premiums.
Follow the money:
TAX CREDIT
An income-tax credit of up to $400 ($800 for a couple) for 95% of workers is President Barack Obama's promised middle-class tax cut, somewhat scaled back. Individuals with incomes above $100,000 and couples with incomes above $200,000 won't get the tax credit.
Unlike the stimulus checks sent to taxpayers last year (up to $600 for an individual and $1,200 for a couple), the credit will show up this year in the form of lower payroll withholding -- meaning slightly bigger paychecks (the equivalent of about $8 a week). Economists think most workers will spend that money, whereas many consumers banked last year's checks (or used them to pay down debt).
Retirees and some others who don't work will get $250.
Winners: Retail, restaurants, movie rentals -- any seller of small-ticket goods or services.
The score: A small boost to this recession economy, sprinkling money far and wide in the next year.
HOME BUYERS
Congress passed a $7,500 tax credit for first-time home buyers last year, but it did little to revive the slumping housing market. The new bill increases the credit to $8,000 and eliminates a requirement that buyers repay the credit over time.
A bigger deal: Treasury Secretary Timothy Geithner committed $50 billion last week to help homeowners avoid foreclosure and renegotiate mortgages.
Winners: Homebuilders; Realtors; manufacturers and retailers of home products (a home purchase stimulates sales of carpeting, furniture and home-remodeling products and services); loan-service companies (government may pay fees to rework loans).
The score: The tax credit is far less than what builders and real-estate interests had hoped for. No quick turnaround for housing given the scale of the recession and housing downturn.
CAR BUYERS
Buyers of new domestic and foreign cars and trucks will get a tax deduction on state and local sales taxes -- a big deduction considering sales tax approaches 10% in some areas.
Winners: Auto marketers and dealers.
The score: A small boost. The Tax Policy Center said: "Any increase in demand is highly uncertain ... given the precarious state of the economy and many households' finances."
The bill also expands credits for plug-in hybrid vehicles, an emerging market. Buyers will get a tax credit up to $7,500 for a plug-in electric car and a 10% credit (up to $2,500) for two- and three-wheel vehicles such as electric scooters.
Winners: General Motors Corp. and its Chevy Volt (due in late 2010); Zap, a California-based maker of electric vehicles; Vectrix Corp., a Rhode Island-based maker of electric scooters.
The score: A win for the green team, but plug-ins are a pricey play; Volt is expected to cost at least $40,000 (before incentives).
BROADBAND
The bill includes $7.2 billion to expand broadband, with an emphasis on "unserved" and "underserved" communities such as rural areas. Within a year, the Federal Communications Commission must produce a "national broadband plan" including "a plan for use of broadband infrastructure and services in advancing consumer welfare, civic participation, public safety and homeland security, community development, health-care delivery, energy independence and efficiency, education, worker training, private-sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes."
Winners: Telecom companies, media companies, others developing broadband-based content and services.
The score: A boost to anyone wanting to deliver high-bandwidth content, such as video, to households far and wide. Workers in rural areas will find it easier to get on the net.
COMPUTERS
The bill allows college students to use money from 529 college-savings plans to pay for computers, software and internet access.
Winners: PC marketers such as Apple, Dell and Hewlett-Packard
The score: No videogames; money can't pay for "sports, games or hobbies" software "unless the software is predominantly educational in nature."
APPLIANCES
The bill includes $300 million for rebates on Energy Star appliances. States will administer the program. About 15 states already offer appliance rebates; this will expand that effort.
Winners: Appliance marketers such as Whirlpool Corp. and General Electric Co.; retailers such as Home Depot and Sears.
The score: Consumer rebates will offset the cost difference between Energy Star and non-Energy Star appliances; consumers will save money with lower energy bills.
DIGITAL TV
Congress allocated $650 million to pay for more coupons for digital-to-analog TV converter boxes and related educational/outreach efforts.
Winners: Michley Electronics' Tivax, LG Electronics' Zenith and other marketers of converter boxes; Amazon, RadioShack and other retailers.
The score: Government money had run out for $40 converter-box rebate coupons, so this will get the coupons flowing again. Mr. Obama, meanwhile, signed legislation putting off the nation's digital TV switchover until June 12.
CENSUS
The Census Bureau won $1 billion in additional money for the 2010 Census, some of which is meant to "increase targeted media purchases." Allocation includes "up to $250 million" for "partnership and outreach efforts to minority communities and hard-to-reach populations." That could mean more money for minority agencies and media.
Winners: Lead agency DraftFCB and media shop Initiative, both part of Interpublic Group; multicultural subcontractors including DraftFCB, GlobalHue, A to Sí, IW Group, G&G, Allied Media, Weber Shandwick, Jack Morton, Booz Allen Hamilton, Marcom Group and Zona Design.
The score: More money for promotion; potentially a more accurate census.
Where That $787 Billion Is Going -- and Who Stands to Gain
By Bradley Johnson and Ira Teinowitz Published: February 16, 2009
LOS ANGELES (AdAge.com) -- Pass the bucks.
The American Recovery and Reinvestment Act of 2009, approved by Congress last week, will try to rescue the economy with an unprecedented $787 billion package of government spending and tax cuts.
Spending is expected to account for nearly three-fourths of the package; tax cuts will make up the rest. The bill is loaded with public-works projects; green initiatives (such as incentives for renewable energy and energy efficiency); and money for the social safety net, education and myriad federal and state programs.
If this jump-starts the stalled economy, then consumers and business stand to benefit regardless of how specifics of the plan -- a home buyer's credit, say -- directly affect them. The economic-stimulus bill also helps the unemployed through extended jobless benefits and subsidies on health-insurance premiums.
Follow the money:
TAX CREDIT
An income-tax credit of up to $400 ($800 for a couple) for 95% of workers is President Barack Obama's promised middle-class tax cut, somewhat scaled back. Individuals with incomes above $100,000 and couples with incomes above $200,000 won't get the tax credit.
Unlike the stimulus checks sent to taxpayers last year (up to $600 for an individual and $1,200 for a couple), the credit will show up this year in the form of lower payroll withholding -- meaning slightly bigger paychecks (the equivalent of about $8 a week). Economists think most workers will spend that money, whereas many consumers banked last year's checks (or used them to pay down debt).
Retirees and some others who don't work will get $250.
Winners: Retail, restaurants, movie rentals -- any seller of small-ticket goods or services.
The score: A small boost to this recession economy, sprinkling money far and wide in the next year.
HOME BUYERS
Congress passed a $7,500 tax credit for first-time home buyers last year, but it did little to revive the slumping housing market. The new bill increases the credit to $8,000 and eliminates a requirement that buyers repay the credit over time.
A bigger deal: Treasury Secretary Timothy Geithner committed $50 billion last week to help homeowners avoid foreclosure and renegotiate mortgages.
Winners: Homebuilders; Realtors; manufacturers and retailers of home products (a home purchase stimulates sales of carpeting, furniture and home-remodeling products and services); loan-service companies (government may pay fees to rework loans).
The score: The tax credit is far less than what builders and real-estate interests had hoped for. No quick turnaround for housing given the scale of the recession and housing downturn.
CAR BUYERS
Buyers of new domestic and foreign cars and trucks will get a tax deduction on state and local sales taxes -- a big deduction considering sales tax approaches 10% in some areas.
Winners: Auto marketers and dealers.
The score: A small boost. The Tax Policy Center said: "Any increase in demand is highly uncertain ... given the precarious state of the economy and many households' finances."
The bill also expands credits for plug-in hybrid vehicles, an emerging market. Buyers will get a tax credit up to $7,500 for a plug-in electric car and a 10% credit (up to $2,500) for two- and three-wheel vehicles such as electric scooters.
Winners: General Motors Corp. and its Chevy Volt (due in late 2010); Zap, a California-based maker of electric vehicles; Vectrix Corp., a Rhode Island-based maker of electric scooters.
The score: A win for the green team, but plug-ins are a pricey play; Volt is expected to cost at least $40,000 (before incentives).
BROADBAND
The bill includes $7.2 billion to expand broadband, with an emphasis on "unserved" and "underserved" communities such as rural areas. Within a year, the Federal Communications Commission must produce a "national broadband plan" including "a plan for use of broadband infrastructure and services in advancing consumer welfare, civic participation, public safety and homeland security, community development, health-care delivery, energy independence and efficiency, education, worker training, private-sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes."
Winners: Telecom companies, media companies, others developing broadband-based content and services.
The score: A boost to anyone wanting to deliver high-bandwidth content, such as video, to households far and wide. Workers in rural areas will find it easier to get on the net.
COMPUTERS
The bill allows college students to use money from 529 college-savings plans to pay for computers, software and internet access.
Winners: PC marketers such as Apple, Dell and Hewlett-Packard
The score: No videogames; money can't pay for "sports, games or hobbies" software "unless the software is predominantly educational in nature."
APPLIANCES
The bill includes $300 million for rebates on Energy Star appliances. States will administer the program. About 15 states already offer appliance rebates; this will expand that effort.
Winners: Appliance marketers such as Whirlpool Corp. and General Electric Co.; retailers such as Home Depot and Sears.
The score: Consumer rebates will offset the cost difference between Energy Star and non-Energy Star appliances; consumers will save money with lower energy bills.
DIGITAL TV
Congress allocated $650 million to pay for more coupons for digital-to-analog TV converter boxes and related educational/outreach efforts.
Winners: Michley Electronics' Tivax, LG Electronics' Zenith and other marketers of converter boxes; Amazon, RadioShack and other retailers.
The score: Government money had run out for $40 converter-box rebate coupons, so this will get the coupons flowing again. Mr. Obama, meanwhile, signed legislation putting off the nation's digital TV switchover until June 12.
CENSUS
The Census Bureau won $1 billion in additional money for the 2010 Census, some of which is meant to "increase targeted media purchases." Allocation includes "up to $250 million" for "partnership and outreach efforts to minority communities and hard-to-reach populations." That could mean more money for minority agencies and media.
Winners: Lead agency DraftFCB and media shop Initiative, both part of Interpublic Group; multicultural subcontractors including DraftFCB, GlobalHue, A to Sí, IW Group, G&G, Allied Media, Weber Shandwick, Jack Morton, Booz Allen Hamilton, Marcom Group and Zona Design.
The score: More money for promotion; potentially a more accurate census.
BLACK BOOK:WHOLESALE MARKET APPEARS BRIGHTER
By Joe Overby, Staff WriterFebruary 16, 2009
Email this story Printer Friendly Version
GAINESVILLE, Ga. — As it has been the case for much of 2009, auction activity and prices continued to improve over the past week. Ricky Beggs, Black Book's vice president and managing editor, suggested this wholesale upswing can be boiled down to vehicle supply. "With limited trade-ins at retail lots and franchise dealers, there just aren't enough vehicles to go around," he explained in his latest Beggs on the Market video report. "And for someone who needs a used car, the availability of vehicle falls back on the auctions." In other words, as auctions become the most viable source for dealers to find used inventory, this has driven up wholesale prices and activity. Breaking auction prices down further, Beggs noted that nine of the 14 truck segments that Black Book tracks showed increases in value over the last week. Moreover, for the eighth consecutive week, full-size trucks and full-size SUVs have shown improvement, as well. On the car side of the market, just two of the 10 segments climbed in value. "Although the changes aren't as great, the only segment that really (saw) an increase in how much it went down was the premium luxury car," Beggs pointed out. "Other than that, the car segments stayed pretty stable, as well, from last week to this week." Moving on, Beggs also said he talked with more dealers than usual this week in order to provide a more detailed look at how the retail side of the market is performing. And apparently, conditions are improving there, as well. "Most are saying that there is a little more traffic on the lots and that's a good sign," he noted. "They're also saying that the availability of credit continues to get just a little better each week, with some of the lending sources lowering their credit scores. "And some of the factors involved in making that decision (to lower credit-score requirements) makes it a little easier for that retail customer to get that loan approved," Beggs continued. "This kind of supports why there's more activity at the auction lanes and that activity continues to be very strong."
Email this story Printer Friendly Version
GAINESVILLE, Ga. — As it has been the case for much of 2009, auction activity and prices continued to improve over the past week. Ricky Beggs, Black Book's vice president and managing editor, suggested this wholesale upswing can be boiled down to vehicle supply. "With limited trade-ins at retail lots and franchise dealers, there just aren't enough vehicles to go around," he explained in his latest Beggs on the Market video report. "And for someone who needs a used car, the availability of vehicle falls back on the auctions." In other words, as auctions become the most viable source for dealers to find used inventory, this has driven up wholesale prices and activity. Breaking auction prices down further, Beggs noted that nine of the 14 truck segments that Black Book tracks showed increases in value over the last week. Moreover, for the eighth consecutive week, full-size trucks and full-size SUVs have shown improvement, as well. On the car side of the market, just two of the 10 segments climbed in value. "Although the changes aren't as great, the only segment that really (saw) an increase in how much it went down was the premium luxury car," Beggs pointed out. "Other than that, the car segments stayed pretty stable, as well, from last week to this week." Moving on, Beggs also said he talked with more dealers than usual this week in order to provide a more detailed look at how the retail side of the market is performing. And apparently, conditions are improving there, as well. "Most are saying that there is a little more traffic on the lots and that's a good sign," he noted. "They're also saying that the availability of credit continues to get just a little better each week, with some of the lending sources lowering their credit scores. "And some of the factors involved in making that decision (to lower credit-score requirements) makes it a little easier for that retail customer to get that loan approved," Beggs continued. "This kind of supports why there's more activity at the auction lanes and that activity continues to be very strong."
Monday, February 16, 2009
ADVERTISING DURING A RECESSION
Advertising during a recession.
Publication: Direct Marketing Date: Sunday, September 1 1991
Does your company view advertising as an expense or an investment? How have others succeeded during a soft economy? These questions and others are answered in this special report.
(The following was excerpted from NW Ayer Inc.'s report: Advertising During a Recession: Key Issues anti
Opportunities." The marketing department takes an in-depth look at the last 40 years, in terms of recessions and their effect on advertising.)
Whether to advertise during a recession is a question that has been raised by agencies and clients alike worldwide since the early 1920s. Unfortunately, to our knowledge, only the United States has examined and published data on the subject within the confines of a rigorous framework.
One might feel that the results are self-serving for the advertising industry, but remember, these studies were not conducted by ad agencies. The studies were conducted by economists, business security analysts, academicians and others who place severe intellectual and professional constraints on their investigations. Some of the findings and examples are interesting. One example, which is noted by Wall Street analysts, for instance, attributes the 1975 setbacks of Avon Products and Hershey Foods at least in part to advertising cuts, and credits heavier advertising for the improved performance of Philip Morris and Revlon during the same period,
Also, the research indicates that during recessions, advances in sales can be made by shifting emphasis within advertising executions. Advertisements during a recession tend to stress quality and value, as well as new uses for old brands. This is primarily driven by the fact that commercials and advertising in general need to reflect the current consumer mentality, regardless of the status of current means.
With these introductory comments, let us look at the data available on advertising during a recession.
The Issues And The Opportunities
The question of advertising during a recession is one that has been asked many times over many years. Interestingly, the answer still does not seem clear to enough marketers.
The answer to the question is that advertising during a recession provides a unique window of opportunity for investment purposes to:
1) Build equity;
2) Solidify your customer base;
3) Gain new customers; and
4) Make inroads on your competitors who have cut their advertising during the recession period. This window of opportunity is created by the understanding that advertising is an investment, not an expense.
However, it is easily understood why many people do not view advertising as an investment, but treat it as an expense. It is because advertising frequently does not represent a fixed cost, like capital expenditures, which are investments.
Given the above stated opportunities, one would logically ask: Why do advertisers cut their budgets during recessions.
Excuses For Not Advertising
The three most commonly mentioned excuses for not advertising during a recession are:
"People do not have money, so our advertising would be wasted";
"We can afford to slash, since competitors are doing the same"; and
"The money saved on advertising helps us to pay dividends to stockholders."
The following are three discussions that refute the above excuses:
Rebuttal #1: People do not have the money, so our advertising would be wasted." Studies of every recession since 1940 indicate that recessions have little adverse impact on total employment (the size of the employed labor force has never declined by more than 2 percent) and, similarly, little adverse impact on disposable income. (Real disposable personal income per capita has never declined by more than 2 percent.) The pessimism among advertisers is mainly myth, hardly warranted by facts. Because families start curtailing their purchases during a recession, not less but more advertising is required to prevent consumption from eroding-particularly since both employment and income are holding up reasonably well.
Rebuttal #2: "We can afford to slash, since competitors are doing the same." Equally fallacious is the rationale that a company can afford reducing its advertising spending because everybody else is cutting back. Rather than waiting for business to return to normal, top executives should cash in on the opportunity that the rival companies are creating for them. The company courageous enough to stay in and fight when everyone else is playing safe can bring about a dramatic improvement in market position.
Some progressive companies have recognized this. Instead of withdrawing "into their shells" and waiting for something to happen, they expand their programs during slowdowns. As a result, they better position themselves to benefit when the eventual upturn occurs.
Rebuttal #3: "The money saved on advertising helps us to pay dividends to stockholders." Even more tenuous is the third argument-that advertising should be cut in order to release funds for dividends. Attempting to regain a favorable position lost during a recession costs more in the long run than to retain it by continuing to advertise. There is likely to be a fast erosion of the consumer franchise that the advertiser has taken years, even decades, to build. It is near impossible to regain the old customers once they have adopted competitive brands. And, of course, firms can more readily explain a drop in dividends if the money was used as an investment to protect market share.
Statistics From Past U.S. Recessions
For those who believe in fighting recessions with facts and figures, here are some pertinent ones. They have been culled from research and library files of the Advertising Research Foundation, the American Business Press and the McGraw-Hill Company.
On average, recessions are short. They typically last about 10 months, as the following breakdown indicates:
Recession Duration
1953-54 10 months
1957-58 eight months
1960-61 10 months
1969-70 11 months
1973-75 16 months
1980 six months
1981-82 16 months
median = 10 months
On the average, recessions are mild. During a recession, the GNP typically declines by about 3 percent The exception, of course, is the unusually severe 1973 to 1975 recession, when the GNP declined by 4.3 percent. (That recession also lasted longer than most other recessions of the post-war period-for a total of 16 months.)
GNP*
Recession Decline
1953-54 3.0 percent
1957-58 3.5
1960-61 1.0
1969-70 1.1
1973-75 4.3
1980 2.4
1981-82 3.4
median 3.0 percent
*GNP at annual rate, adjusted for inflation.)
Recessions are selective. Recessions impact some industries, products and regions of the country hard and bypass others entirely. Among the industries and products most affected are: automobiles, home furnishings, large appliances, travel and airlines, convenience foods, aluminum, steel, petrochemicals and synthetic fibers. Relatively unaffected are: liquor and wine, tobacco, small appliances, packaged goods, computer and service industries.
The effects of recession tend to vary regionally, as a result of industry concentration. For instance, the 1981 to 1982 recession had a lesser impact on the hightech/defense/financial industries. As a result, the Northeast region was less affected during that recession. Consumer spending actually increases during recessions. In the previous postwar recessions, real consumers spending typically continued to increase. Of all post-war recessions, the one exception is the 1973 to 1974 recession, during which real consumer expenditures decreased by 0.9 percent.
Recognition decreases when advertising decreases. Likewise, an increase in advertising causes an increase in recognition. Several studies on this topic have been conducted by McGraw-Hill's Laboratory of Advertising Performance. A typical example: A manufacturer of electronics boosted 32 percent market recognition to 45 percent with 13 pages of advertising. When the ad campaign stopped, recognition fell to 37 percent. Steady ad spending during recessions results in higher sales. McGraw-Hill Research proved this conclusively, we believe, in their published study of advertising in the 198 1-1982 recession. For the six-year period from 1980 to 1985, those companies that did not reduce advertising spending during the two recession years collectively increased sales by between 16 percent and 80 percent. More importantly gains made during the recession were permanent and expanded during the three years following the recession.
Companies that cut back on advertising experienced little, if any, sales growth. Similar McGraw-Hill studies of the previous post-war recessions, conducted during the last 20 years, support these findings. Learning from past recessions. As mentioned earlier, the question of to advertise or not to advertise during a recession has been asked over many years, and the evidence indicates that advertising during a recession is smart business. The first known attempt to prove that companies should maintain advertising during bad times dates to the 1920s, when advertising executive, Roland S. Vaile, tracked the revenues of 200 companies before, during and after the 1923 recession. In April 1927 Vaile reported that the companies that had advertised the most had the biggest sales increases throughout the period. But Vaile's data, which failed to take into account such factors as profits or market share, convinced no one.
An ambitious study was begun after World War 11, It was a long-term project to plot the profits of a large group of companies through a series of recessions.
Beginning in 1947, the study measured the annual advertising expenditures of each company and correlated the figures with sales trends before, during and after the recessions of 1919 and 1954, For the recessions of 1958 and 1961, this study included tracking profits. Not only did sales and profits almost invariably fall at companies that cut advertising, but after the recession had ended, they continued to lag behind companies that had, maintained their ad budgets.
After a period of time, the study was then picked up by the American Business Press (ABP), an association of trade publications, which continued the investigation. The ABP project has become widely known throughout the advertising industry because of its analysis of the severe 1974 to 1975 recession. Relying on questionnaires submitted by advertisers, the study tracked the sales and profits growth of 173 industrial companies between 1972 and 1977. The companies were divided into two groups: those that reduced advertising during the recession; and those that did not reduce advertising,
The study found that the companies that reduced advertising achieved minimal sales growth in 1974, suffered a sales decline in 1975 and increased sales by 70 percent during the five-year period. For companies that maintained their ad budgets, sales suffered no slowdown during the recession and grew 150 percent for the entire period. Profits showed a similar pattern. Most notably, the momentum gained by the steady advertisers during the recession helped them to grow at a faster rate in 1976 and 1977.
Holding/increasing Ad Spending
One company that certainly seemed to prove the point is New Britain, Connecticut's Stanley Works. In 1974, one of the world's largest manufacturers of hand tools, sensed a softening in demand for its consumer products. So, in the heart of the recession, it launched the biggest advertising campaign in its history-a blitz of network TV and magazine ads aimed at driving home the Stanley name to the consumer market.
The campaign worked. While sales of Stanley's heavy industrial tools fell sharply during 1974 and 1975, its consumer business was able to take up the slack, giving the company a large sales and profit increase in 1974 and preventing a substantial decline in 1975. Additionally, its hand tool business has continued to grow at an 8 percent annual rate-twice that of its competitors.
Another example is General Motors' Chevrolet division, which faced mounting inventories in 1975 due to the recession and high fuel prices. The company abandoned its traditional practice of setting its dvertising expenditures as a fixed percentage of sales. While volume fell 10 percent because of the economic slowdown, Chevrolet maintained its ad budget and actually increased advertising for its fuel-saving economy models. Ford Motor Company, on the other hand, slashed advertising by 14 percent in an attempt to shore up profits. That may have achieved its goal, but it permitted Chevrolet to increase its market share by 2 percent.
Other companies that have taken advantage of advertising during a recession to establish strong market positions while developing brand equity include such diverse company names as BristolMyers, Campbell Soup, Coca-cola, Gillette, Nabisco, Pillsbury, Procter and Gamble, R.J. Reynolds, Rubbermaid, Levi Strauss, Stroh Brewery, United Airlines and Welsh Foods-among others.
Shifting Emphasis Of Advertising
During the 1973-1975 recession, however, some companies found it paid to shift advertising emphasis. Quaker Oats, for example, stepped up advertising of grain products as cheaper sources of protein. The company was able to reverse a long-term decline in sales of oats, grits and cornmeal. General Foods took much the same tact, shifting advertising from more expensive frozen food products to less expensive ones.
Other examples of shifting emphasis would include:
1) A-1 Steak Sauce: A-1 Steak Sauce isn't just for sirloin anymore." TV commercials show people pouring A-1 on "recession-staple"-Hamburgers.
2) Michelin: The Michelin cartoon character used to say that its steel-belted radial tires are expensive but worth it; during the recession, the cartoon character states how surprisingly affordable Michelins are.
3) Ziploc Food Bags: Ziploc food bags once boasted their air-tight seal (it still applies). During the recession periods, when food prices tend to be high, the emphasis becomes that leftovers need special treatment-a special plastic bag for storage.
In the midst of a recession, therefore, advertisers may retool their message to recognize that they are aware that consumers are under financial pressure. This retooling might include trying a new tact to reach the consumer. As the above examples illustrate, in many cases, advertisers actually increase their advertising budgets during a recession.
Advertising's Impact On The Economy
Many economists believe that it would not take significant pressure to cause a chain reaction of anticipatory advertising cuts that could turn recession fears into a self-fulfilling prophecy. Some economists theorize that all modern recessions have been intensified and prolonged by just such cutbacks. Instead of increasing profits, as most companies expect, advertising cutbacks only reduce demand.
Many economists argue that this trend has been overlooked, or at least, underrated, and that many recessions could be controlled by encouraging greater advertising. Also, some economists believe that the tax laws should be changed to offer companies an incentive to set up contingency reserves in good times to finance heavy advertising when the bottom line will not permit.
Without that kind of incentive, most companies will continue to indulge in buying sprees when business is good and pare media expenditures to the bone when sales fall, say several advertising executives.
Publication: Direct Marketing Date: Sunday, September 1 1991
Does your company view advertising as an expense or an investment? How have others succeeded during a soft economy? These questions and others are answered in this special report.
(The following was excerpted from NW Ayer Inc.'s report: Advertising During a Recession: Key Issues anti
Opportunities." The marketing department takes an in-depth look at the last 40 years, in terms of recessions and their effect on advertising.)
Whether to advertise during a recession is a question that has been raised by agencies and clients alike worldwide since the early 1920s. Unfortunately, to our knowledge, only the United States has examined and published data on the subject within the confines of a rigorous framework.
One might feel that the results are self-serving for the advertising industry, but remember, these studies were not conducted by ad agencies. The studies were conducted by economists, business security analysts, academicians and others who place severe intellectual and professional constraints on their investigations. Some of the findings and examples are interesting. One example, which is noted by Wall Street analysts, for instance, attributes the 1975 setbacks of Avon Products and Hershey Foods at least in part to advertising cuts, and credits heavier advertising for the improved performance of Philip Morris and Revlon during the same period,
Also, the research indicates that during recessions, advances in sales can be made by shifting emphasis within advertising executions. Advertisements during a recession tend to stress quality and value, as well as new uses for old brands. This is primarily driven by the fact that commercials and advertising in general need to reflect the current consumer mentality, regardless of the status of current means.
With these introductory comments, let us look at the data available on advertising during a recession.
The Issues And The Opportunities
The question of advertising during a recession is one that has been asked many times over many years. Interestingly, the answer still does not seem clear to enough marketers.
The answer to the question is that advertising during a recession provides a unique window of opportunity for investment purposes to:
1) Build equity;
2) Solidify your customer base;
3) Gain new customers; and
4) Make inroads on your competitors who have cut their advertising during the recession period. This window of opportunity is created by the understanding that advertising is an investment, not an expense.
However, it is easily understood why many people do not view advertising as an investment, but treat it as an expense. It is because advertising frequently does not represent a fixed cost, like capital expenditures, which are investments.
Given the above stated opportunities, one would logically ask: Why do advertisers cut their budgets during recessions.
Excuses For Not Advertising
The three most commonly mentioned excuses for not advertising during a recession are:
"People do not have money, so our advertising would be wasted";
"We can afford to slash, since competitors are doing the same"; and
"The money saved on advertising helps us to pay dividends to stockholders."
The following are three discussions that refute the above excuses:
Rebuttal #1: People do not have the money, so our advertising would be wasted." Studies of every recession since 1940 indicate that recessions have little adverse impact on total employment (the size of the employed labor force has never declined by more than 2 percent) and, similarly, little adverse impact on disposable income. (Real disposable personal income per capita has never declined by more than 2 percent.) The pessimism among advertisers is mainly myth, hardly warranted by facts. Because families start curtailing their purchases during a recession, not less but more advertising is required to prevent consumption from eroding-particularly since both employment and income are holding up reasonably well.
Rebuttal #2: "We can afford to slash, since competitors are doing the same." Equally fallacious is the rationale that a company can afford reducing its advertising spending because everybody else is cutting back. Rather than waiting for business to return to normal, top executives should cash in on the opportunity that the rival companies are creating for them. The company courageous enough to stay in and fight when everyone else is playing safe can bring about a dramatic improvement in market position.
Some progressive companies have recognized this. Instead of withdrawing "into their shells" and waiting for something to happen, they expand their programs during slowdowns. As a result, they better position themselves to benefit when the eventual upturn occurs.
Rebuttal #3: "The money saved on advertising helps us to pay dividends to stockholders." Even more tenuous is the third argument-that advertising should be cut in order to release funds for dividends. Attempting to regain a favorable position lost during a recession costs more in the long run than to retain it by continuing to advertise. There is likely to be a fast erosion of the consumer franchise that the advertiser has taken years, even decades, to build. It is near impossible to regain the old customers once they have adopted competitive brands. And, of course, firms can more readily explain a drop in dividends if the money was used as an investment to protect market share.
Statistics From Past U.S. Recessions
For those who believe in fighting recessions with facts and figures, here are some pertinent ones. They have been culled from research and library files of the Advertising Research Foundation, the American Business Press and the McGraw-Hill Company.
On average, recessions are short. They typically last about 10 months, as the following breakdown indicates:
Recession Duration
1953-54 10 months
1957-58 eight months
1960-61 10 months
1969-70 11 months
1973-75 16 months
1980 six months
1981-82 16 months
median = 10 months
On the average, recessions are mild. During a recession, the GNP typically declines by about 3 percent The exception, of course, is the unusually severe 1973 to 1975 recession, when the GNP declined by 4.3 percent. (That recession also lasted longer than most other recessions of the post-war period-for a total of 16 months.)
GNP*
Recession Decline
1953-54 3.0 percent
1957-58 3.5
1960-61 1.0
1969-70 1.1
1973-75 4.3
1980 2.4
1981-82 3.4
median 3.0 percent
*GNP at annual rate, adjusted for inflation.)
Recessions are selective. Recessions impact some industries, products and regions of the country hard and bypass others entirely. Among the industries and products most affected are: automobiles, home furnishings, large appliances, travel and airlines, convenience foods, aluminum, steel, petrochemicals and synthetic fibers. Relatively unaffected are: liquor and wine, tobacco, small appliances, packaged goods, computer and service industries.
The effects of recession tend to vary regionally, as a result of industry concentration. For instance, the 1981 to 1982 recession had a lesser impact on the hightech/defense/financial industries. As a result, the Northeast region was less affected during that recession. Consumer spending actually increases during recessions. In the previous postwar recessions, real consumers spending typically continued to increase. Of all post-war recessions, the one exception is the 1973 to 1974 recession, during which real consumer expenditures decreased by 0.9 percent.
Recognition decreases when advertising decreases. Likewise, an increase in advertising causes an increase in recognition. Several studies on this topic have been conducted by McGraw-Hill's Laboratory of Advertising Performance. A typical example: A manufacturer of electronics boosted 32 percent market recognition to 45 percent with 13 pages of advertising. When the ad campaign stopped, recognition fell to 37 percent. Steady ad spending during recessions results in higher sales. McGraw-Hill Research proved this conclusively, we believe, in their published study of advertising in the 198 1-1982 recession. For the six-year period from 1980 to 1985, those companies that did not reduce advertising spending during the two recession years collectively increased sales by between 16 percent and 80 percent. More importantly gains made during the recession were permanent and expanded during the three years following the recession.
Companies that cut back on advertising experienced little, if any, sales growth. Similar McGraw-Hill studies of the previous post-war recessions, conducted during the last 20 years, support these findings. Learning from past recessions. As mentioned earlier, the question of to advertise or not to advertise during a recession has been asked over many years, and the evidence indicates that advertising during a recession is smart business. The first known attempt to prove that companies should maintain advertising during bad times dates to the 1920s, when advertising executive, Roland S. Vaile, tracked the revenues of 200 companies before, during and after the 1923 recession. In April 1927 Vaile reported that the companies that had advertised the most had the biggest sales increases throughout the period. But Vaile's data, which failed to take into account such factors as profits or market share, convinced no one.
An ambitious study was begun after World War 11, It was a long-term project to plot the profits of a large group of companies through a series of recessions.
Beginning in 1947, the study measured the annual advertising expenditures of each company and correlated the figures with sales trends before, during and after the recessions of 1919 and 1954, For the recessions of 1958 and 1961, this study included tracking profits. Not only did sales and profits almost invariably fall at companies that cut advertising, but after the recession had ended, they continued to lag behind companies that had, maintained their ad budgets.
After a period of time, the study was then picked up by the American Business Press (ABP), an association of trade publications, which continued the investigation. The ABP project has become widely known throughout the advertising industry because of its analysis of the severe 1974 to 1975 recession. Relying on questionnaires submitted by advertisers, the study tracked the sales and profits growth of 173 industrial companies between 1972 and 1977. The companies were divided into two groups: those that reduced advertising during the recession; and those that did not reduce advertising,
The study found that the companies that reduced advertising achieved minimal sales growth in 1974, suffered a sales decline in 1975 and increased sales by 70 percent during the five-year period. For companies that maintained their ad budgets, sales suffered no slowdown during the recession and grew 150 percent for the entire period. Profits showed a similar pattern. Most notably, the momentum gained by the steady advertisers during the recession helped them to grow at a faster rate in 1976 and 1977.
Holding/increasing Ad Spending
One company that certainly seemed to prove the point is New Britain, Connecticut's Stanley Works. In 1974, one of the world's largest manufacturers of hand tools, sensed a softening in demand for its consumer products. So, in the heart of the recession, it launched the biggest advertising campaign in its history-a blitz of network TV and magazine ads aimed at driving home the Stanley name to the consumer market.
The campaign worked. While sales of Stanley's heavy industrial tools fell sharply during 1974 and 1975, its consumer business was able to take up the slack, giving the company a large sales and profit increase in 1974 and preventing a substantial decline in 1975. Additionally, its hand tool business has continued to grow at an 8 percent annual rate-twice that of its competitors.
Another example is General Motors' Chevrolet division, which faced mounting inventories in 1975 due to the recession and high fuel prices. The company abandoned its traditional practice of setting its dvertising expenditures as a fixed percentage of sales. While volume fell 10 percent because of the economic slowdown, Chevrolet maintained its ad budget and actually increased advertising for its fuel-saving economy models. Ford Motor Company, on the other hand, slashed advertising by 14 percent in an attempt to shore up profits. That may have achieved its goal, but it permitted Chevrolet to increase its market share by 2 percent.
Other companies that have taken advantage of advertising during a recession to establish strong market positions while developing brand equity include such diverse company names as BristolMyers, Campbell Soup, Coca-cola, Gillette, Nabisco, Pillsbury, Procter and Gamble, R.J. Reynolds, Rubbermaid, Levi Strauss, Stroh Brewery, United Airlines and Welsh Foods-among others.
Shifting Emphasis Of Advertising
During the 1973-1975 recession, however, some companies found it paid to shift advertising emphasis. Quaker Oats, for example, stepped up advertising of grain products as cheaper sources of protein. The company was able to reverse a long-term decline in sales of oats, grits and cornmeal. General Foods took much the same tact, shifting advertising from more expensive frozen food products to less expensive ones.
Other examples of shifting emphasis would include:
1) A-1 Steak Sauce: A-1 Steak Sauce isn't just for sirloin anymore." TV commercials show people pouring A-1 on "recession-staple"-Hamburgers.
2) Michelin: The Michelin cartoon character used to say that its steel-belted radial tires are expensive but worth it; during the recession, the cartoon character states how surprisingly affordable Michelins are.
3) Ziploc Food Bags: Ziploc food bags once boasted their air-tight seal (it still applies). During the recession periods, when food prices tend to be high, the emphasis becomes that leftovers need special treatment-a special plastic bag for storage.
In the midst of a recession, therefore, advertisers may retool their message to recognize that they are aware that consumers are under financial pressure. This retooling might include trying a new tact to reach the consumer. As the above examples illustrate, in many cases, advertisers actually increase their advertising budgets during a recession.
Advertising's Impact On The Economy
Many economists believe that it would not take significant pressure to cause a chain reaction of anticipatory advertising cuts that could turn recession fears into a self-fulfilling prophecy. Some economists theorize that all modern recessions have been intensified and prolonged by just such cutbacks. Instead of increasing profits, as most companies expect, advertising cutbacks only reduce demand.
Many economists argue that this trend has been overlooked, or at least, underrated, and that many recessions could be controlled by encouraging greater advertising. Also, some economists believe that the tax laws should be changed to offer companies an incentive to set up contingency reserves in good times to finance heavy advertising when the bottom line will not permit.
Without that kind of incentive, most companies will continue to indulge in buying sprees when business is good and pare media expenditures to the bone when sales fall, say several advertising executives.
Subscribe to:
Posts (Atom)
