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Making the Strategic Argument for
Advertising During Difficult Economic Times CARF
Workshop Toronto Wednesday, March 6, 2008
Jay Handelman Associate Professor,
Marketing Queens School of Business
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Hyundai questions ad spending for the 2008
Super Bowl
Advertising is the canary in the economic
coalmine
KRAFT BOOSTS AD BUCKS But the key to our future
in all our businesses is continuing to ensure
that we have invested appropriately in marketing
support and innovation Irene Rosenfeld, Kraft
CEO
If we could cut ad spending, our earnings per
share for this quarter would increase noticeably
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Advertising as an Expense
Advertising as Investment Innovation
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Advertising as an Investment Customer Value
Short Term Customer Satisfaction Perceived
Relevance of Tangible Attributes Of Brand/Service
to Consumer Perceived Relevance of Intangible
Aspects Of Brand/Service to Consumer Customers
Feeling of Being Treated With Respect Customers
Feeling of Supporting a Socially
Responsible/Ethical Company
Quality
_______
Value
Price
Tangible Costs Monetary, Time, other
Transaction Costs Perceived Costs Social,
Psychological, Functional Risks.
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Which One Has More Value For Our Target Consumer?
American Eagle 49.50
Value Village 3.99
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Advertising as an Investment Customer Value
Short Term Customer Satisfaction Perceived
Relevance of Tangible Attributes Of Brand/Service
to Consumer Perceived Relevance of Intangible
Aspects Of Brand/Service to Consumer Customers
Feeling of Being Treated With Respect Customers
Feeling of Supporting a Socially
Responsible/Ethical Company
Quality
_______
Value
Price
Tangible Costs Monetary, Time, other
Transaction Costs Perceived Costs Social,
Psychological, Functional Risks.
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Cardinal Rule of Customer Value
Value Resides In The Mind of the Consumer
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The Implication

• Your brand does not reside in the
• Corporate Board room!
• It resides out there
• Amongst consumer groups
• In brand communities
• In chat rooms, discussion groups,
• MySpace, YouTube, FaceBook

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McDonalds Experience with Supersize Me
Larry Light Coins The Term Brand
Journalism Identifying one brand
position, communicating it in a repetitive manner
is old-fashioned, out-of-date, out of
touch. Brand journalism is a brand narrative, a
brand chronicle, a way of understanding
what happens to a brand in the world
Larry Light, Executive VP, Global Chief
Marketing Officer
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The Need For Innovation
Chevy Tahoe
Taking the Axe to Unilevers Hypocrisy -
Toronto Star, November 2007
Jeff Jarvis Dell Hell
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1) Talk Like a CFO
Fixed Costs
Break Even (Units)

Selling Price Variable Cost (per
unit) (per unit)
Contribution margin
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1) Talk Like a CFO
Short Term Customer Satisfaction Perceived
Relevance of Tangible Attributes Of
Brand/Service to Consumer Perceived Relevance of
Intangible Aspects of Brand/Service to
Consumer Customers Feeling of Being
Treated With Respect Customers Feeling of
Supporting a Socially Responsible/Ethical Company
Quality
_______
Value
Price
Fixed Cost
Tangible Costs Monetary, Time, other
Transaction Costs Perceived Costs Social,
Psychological, Functional Risks.
Breakeven (units)

SP/unit VC/unit
(Contribution margin)
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2) Longer Term Orientation Manage for the
Upturn, Not the Recession!
Major Brands Increase Ad Spending
Our pricing realization was not as strong as we
would like it to be, because we dont yet have
suitable brand equity - Irene Rosenfeld, Kraft
Chairman, CEO, AdAge Feb. 4, 2008.
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2) Longer Term Orientation Manage for the
Upturn, Not the Recession!
Remember Customers do not go away during a
recession. They may take a spending time out,
but they are still there. What you do during a
recession will impact longer term consumer
perceptions.
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3) Economic Slowdowns Can Be Times of Opportunity
1973
iPod 2001
1974
1980
Walkman 1979/80
1982
2001
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Summary
In times of economic slowdown
Focus on investment in selling price
Keep innovating to maintain a social presence
Focus on building long term customer value
Look for opportunity brought by economic change