Top Brands Should Up Ad-Spend To Counteract Recession
Premium brands should invest more in advertising during a recession rather than cut their marketing budgets, according to new research carried out for the Economics Committee of the Advertising Association.
The ‘True Cost of Cutting Adspend’ study, which looks at leading grocery brands in three recessions during 1970 and 2001, shows that the most successful brands tended to be those that advertised more heavily and more consistently than their rivals.
It says that the current tendency for brands to reduce their adspend particularly on television is the reversal of a very long-term trend, where the category leaders were the ones that out-spent their rivals in terms of advertising.
The report, compiled by Dr Stephen Buck, goes on to suggest that in spite of the many cost pressures they face, premium brands may need to reconsider their present advertising policies. It says that smaller brands, which are maintaining their adspend, are increasing their market share against the top brands, which are cutting their adspend.
Tim Ambler of the London Business School said: “No one with an interest in the effectiveness of advertising and the long-term maintenance of brand franchises can afford to miss the evidence presented here.”
He added: “It puts into context recent major developments in a highly complex and important market and raises pertinent questions about the validity of the long-term strategy of some major advertisers.”
The latest figures from the AA’s Quarterly Survey of Advertising Expenditure indicate that the UK market could be showing signs of stabilising. The figures, compiled by the World Advertising Research Centre, show that UK ad expenditure increased by 1.1% year on year during the second quarter of 2002 to £3,440 million (see TV Leads Growth In UK Adspend During Q2).
Advertising Association: 020 828 2771 www.adassoc.co.uk
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