Ad Effort Can't Rescue Economy -- at Least Not Yet

Government Marketing Push Might Work, but After Country Stabilizes

By Published on .

BATAVIA, Ohio (AdAge.com) -- The ad industry has a long history of volunteering for campaigns in service to our country, even some aimed at bolstering the economy, such as the push urging Americans to "Whip Inflation Now" during the Ford administration. So is it logical, then, for the industry to pitch in with an effort to get Americans spending again?

Don't count on it -- at least not yet.

In economics, the paradox of thrift holds that it's good for individuals to save more money but bad for the economy when everyone does. But the ad industry doesn't seem to think an ad campaign could do much to get a fearful nation spending again -- or even whether that's an advised idea right now. The reason is marketing 101: Don't advertise until you've got the product right. And until America has a viable product -- in this case, a signed-sealed-and-delivered budget stabilizing the job and housing markets -- it's probably wrongheaded to ask its citizens to start spending more than they are.

They didn't: 1976 failed effort.
They didn't: 1976 failed effort.
Groups such as the Ad Council and Association of National Advertisers aren't ruling out a "get the economy moving" effort in the future, but they would take a long and skeptical look if someone, such as the Obama administration, asked.

The subject apparently hadn't been broached until Ad Age asked the Ad Council, the most obvious industry group to shepherd such an effort. And the reception was decidedly lukewarm to getting people in precarious financial situations to spend what they have left.

"It's really hard for me to wrap my head around what would be an overarching message to stimulate the economy," said Peggy Conlan, CEO of the Ad Council.

Other efforts
The Ad Council does have public-service announcements out right now regarding the economy, but none is exactly stimulatory. In fact, it's the opposite.

One backed by the American Institute of Certified Public Accountants encourages people to save money. Seeing as the U.S. personal saving rate climbed from near zero in the first quarter to 3.2% in the fourth quarter of last year, maybe it's working.

An effort in conjunction with the Treasury Department aims to alert young people to the need to keep their credit under control. Nothing there to get the cash registers ringing, either.

Another is a campaign on preventing foreclosures, which in the two-plus years it's been around has prompted more than 200,000 counseling sessions for people to do workouts with lenders, Ms. Conlon said. "What we're doing right now," she said, "is really more helping people deal with the economy rather than stimulating it."

Though the Obama administration hasn't brought up the idea of a stimulatory campaign, the council would listen, she said. But she didn't guarantee participation. "It would have to be responsible, effective and authentic," Ms. Conlon said, adding that she has doubts a campaign could clear those hurdles right now.

WIN fail
The Ad Council was part of a campaign that flew in the face of economic headwinds in the past: Gerald Ford's "Whip Inflation Now" effort in 1976. "It was deemed to be a miserable failure," Ms. Conlon said. "The WIN buttons he wore and all of those things became a joke."

The Association of National Advertisers, too, seems to view an effort to get people spending as foolhardy. "It's not going to be an advertising campaign that's going to get people to spend or to invest or whatever," said ANA CEO Bob Liodice. "It's going to be the effect of government policies that's going to convince people to spend money or not."

President Barack Obama appears to agree. Besides the bully pulpit, he has access to perhaps the most sophisticated marketing apparatus any president has ever brought to the White House, including a 13.2 million-name e-mail database.

And last week he used it to e-mail a video link to supporters, via the Democratic National Committee, urging them to pressure lawmakers to pass his budget as the foundation for long-term prosperity. In it, he added: "We can't go back to an economy based on reckless speculation and spending beyond our means."

As a member of the Ad Council's executive committee, Mr. Liodice said he believes the group would be inclined to support an economic-recovery message from the Obama administration, though he has no idea what the message would be.

'Something tangible' needed
The Conference Board's Consumer Confidence Index hit another low in February for the 42 years of its existence, but Lynn Franco, director of the group's research center, said she doubts an ad campaign could do much to change the graph. "It generally takes something tangible to change consumer confidence," she said. "And right now that would be the job market."

But declines in spending and confidence aren't entirely based on structural factors, said Gus Faucher, director of macroeconomics for Moody's Economy.com. For most consumers right now, it makes sense to save more money, though he said he's not sure they need any ads to encourage that. Fear of job losses is the major factor, he said.

"However, there are consumers who are still doing well, whose jobs are secure, who have cut back on spending, and that is weighing on the economy," Mr. Faucher said. "You want those folks to open up their purse strings a little bit."

The severe hit high-end retailers such as Nordstrom have taken while retailers such as Walmart fare better is one sign of the extent to which a pullback by upper-income consumers has hit the economy particularly hard since the fourth quarter, he said. Conceivably, a well-crafted campaign could encourage some to spend again, he said, though it goes against the grain of huge losses in their net worth from the collapse of financial and housing markets.

And there's the rub. For now, it's probably up to individual marketers to show that they can deliver great value for the consumer -- and aren't all about lining the pockets of their senior executives.

In this article:
Most Popular