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The History of Advertising During a Recession

March 2009, F&I and Showroom - Feature

by Denny Long

I have always been somewhat of a history buff. I am especially intrigued by business history and the great industrialists of the past. You can learn a lot just by reading quotes from our past business leaders. Take this quote from one of the founders of our feast, Henry Ford: “A man who stops advertising to save money is like a man who stops a clock to save time.”

Many smart people who followed Ford agree with this philosophy. As a matter of fact, there are many studies on the subject of advertising during recessions, and the results may surprise you. Look at this as a little history lesson to which everyone in business should pay close attention.

During the 1970 recession, a study by American Business Press and Meldrum & Fewsmith showed that “Sales and profits can be maintained and increased in recession years and in the years immediately following by those who are willing to maintain an aggressive marketing posture, while others adopt the philosophy of cutting back on promotional efforts when sales appear to be harder to get.”

During the 1974-75 recession, another study by the same group stated, “Companies which did not cut marketing expenditures experienced higher sales and net income during those two years and the two years following than those companies which cut in either or both recession years.”

During the 1981-82 recession, a McGraw-Hill study showed businesses that maintained or increased their ad spending during the recession averaged higher sales growth during the recession and in the following three years.

Studies during the recessions in 1985, 1990-91 and 2001 showed sales for companies that remained aggressive during the recession enjoyed sales that were 2.5 times the average of all other businesses.

It’s hard for me to believe that there have been so many recessions during my business career. It’s all part of the ups and downs of business. Many have figured out that you must remain in the game during these tough times or you could end up out of the game altogether. There is no doubt in my mind that the stores still doing well right now have stepped up their games and are going for the business the weak will never see.

Now all of this doesn’t mean you can just throw money into advertising and beat the recession. You still must watch every dollar. You must be disciplined in your tracking systems. (You do have tracking systems, right?) This is the time to make sure you track every lead in your CRM system. If you maintain an accurate database of past and present prospects, there are marketing programs out there to help you bring back to life some of those leads you thought were dead. Most everyone who couldn’t buy yesterday will need to buy sometime in the future.

Many of you may already have found that direct mail is a great advertising medium to use during this recession, and for many good reasons. First and foremost, there is a lot less competition in the mailbox right now from the credit card companies. The United States Postal Service recently reported that mail volume has decreased every quarter for the past two years, which is good news for you. You see, the price of postage has only increased slightly during that time, so you get a bigger piece of the consumer’s attention for a great price. Direct mail can and should be personal — using a targeted message, aimed at the right target. You can’t do this with mass media.

You’ll also find that proper use of the telephone is very effective right now. Again, this media is very targeted and personal. You must make sure you have a strong script and the right people with the right training working your phones.

You can bet studies will be done in the future about the companies that made it through this recession and those that didn’t. Take a lesson from the business history books and make sure your dealership is on the positive side of those studies. Good luck and good selling!

Denny Long is senior vice president of Dealer Marketing Services. E-mail him at dlong@special-finance.com.

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