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Ad cuts poor strategy in a recession: Geier

Recession is in the air and, once again, marketing people have started to run for cover ("Ad fall may be worst since Depression," AA, Sept. 3). Budgets are being cut; bottom lines are being covered; and hardly anybody is inclined to study the lessons of recent marketing history. One simple lesson for the competent and confident marketer is that recession can be not a life-threatening risk but a window of opportunity to slam on the competition's fingers.

The facts speak for themselves. We have experienced nine recessions since World War II. On average, they each lasted roughly a year-which means we've lived in recessionary times one year out of every six. Recession is purely a measure that relates to gross domestic product (GDP) and not just consumer expenditure. In fact, customers spent more at the end of each of those recessions-on average 9% more-than they had at the beginning.

History also shows that those marketers who recognized this fundamental truth and took competitive advantage of it-seeing media rates soften and their competitors retrenching and cutting marketing budgets-seeing, in short, an opportunity to make a bid for increased market share and volume.

In the severe recession of 1974-75, for instance, the comparative sales index for these more farsighted marketers was 13% higher in the first year-and rose 30% higher four years later. A McGraw-Hill study of the 1981-82 recession recorded even more impressive gains: Companies that chose to `invest' against the apparent trend posted average gains 40% ahead of non-investors within the first year.

The available data shows clearly that advertisers who increased, or at least maintained, their advertising levels during a recession achieved better immediate and long-term sales results than their competitors, who just cut and ran. Not only did actual and relative gains show up from the get-go, but when "normal" times returned their performance had put even more distance between themselves and competitors.

Examples of benefiting from increased ad spending in a recession abound. During the 1989-91 recessionary period, brands such as Jif peanut butter and Kraft salad dressing spiked their ad budgets and saw sales grow 57% and 70%, respectively. Although beer industry ad spending fell during that time, Bud Light and Coors Light went the other way and saw sales jump by 15% to 16% in a flat volume market. L'Oreal also increased its expenditures worldwide, while its competition cut theirs-showing in 1991 an increase at a faster rate than before. In 1991, Procter & Gamble was the only marketer among 1990's five biggest U.S. advertisers to increase its spending-and, in turn, increase its market share during a recessionary period.

All of which goes to prove the validity of the headline the American Association of Advertis-ing Agencies used in a 1991 campaign: "In a recession, the best defense is a good offense."

In other words, in a recession, advertising works. And advertising, working together with integrated marketing communications, works even better.

Philip H. Geier Jr.

Chairman Emeritus

Interpublic Group of Cos.

New York

Behind Lands' End cuts

I read with interest "Lands' End cuts, grows" (AA, Aug. 13). As it notes, Lands' End cut TV advertising for more targeted print marketing, which has helped fuel positive earnings.

On the surface, it might appear the retailer's decision to rein in mass-market spending is financially motivated, spurred by today's tight economic times. But this is too simplistic. In fact, many companies are not necessarily cutting spending but re-channeling investments in fresh and clever ways to get their brands in front of elusive, non-conforming consumers.

I'm intrigued as to what other factors may have motivated Lands' End. Did it opt out of TV because it wasn't working? Was it able to measure its impact on sales? Why was TV spot-on last year but not now? Is this refocusing part of a broader, long-term business strategy or simply a means to protect short-term earnings?

Without effective and ongoing cross-media campaign measurement, most companies end up playing the marketing guessing game. They trust and hope their decision works out. But they'll never get a clear fix on how well their marketing investments are moving the needle, either in terms of near-term sales or long-term brand value.

Don White

Chief Marketing Officer


Maynard, Mass


* In "Accounts in play" (For the Record, Sept. 3, P. 19), Deutsch, New York, is the incumbent on the General Nutrition Centers account, not Deutsch, Los Angeles, as reported.

* In "Amazon king of dot-com ad jungle" (Aug. 27, P. 19), movie information site IMDb is owned by Amazon.com. It was incorrectly included among sites in which Amazon does not hold a stake.

* In "Images of the week" (Landmarks, Aug. 27, P. 26), a photo of Duran Duran members Simon LeBon and Nick Rhodes was misidentified as a photo of feature film actress Connie Niel-sen. All three are part of Gap's new campaign.

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