The Importance

1
The Importance Value of B2B advertising during
times of economic uncertainty
2009
2
Introduction

• History has shown that companies who either
  steadily continued or aggressively increased
  their advertising efforts during times of
  economic uncertainty
• Experienced overall growth of their businesses at
  the expense of their competition, who chose a
  more timid approach during times of economic
  uncertainty, and either cut back on or cut out
  their advertising budgets all together.
• Experienced continual growth post the period of
  economic uncertainty (tracked post uncertainty
  for three years in most cases), and they gained a
  stronger position in their market and in the eyes
  of the buyer.
• A survey conducted by BtoB Magazine amongst 162
  B-to-B marketers has demonstrated that the
  importance of advertising during times of
  economic uncertainty has clearly resonated with
  marketers and is reflected in their planned
  spending in 2009.

3
2009 BtoB Survey

• Despite the current economic conditions, 29 of
  marketers indicate they will increase spending in
  2009. Over 40 say that their 2009 budgets will
  remain the same as 2008.

Poll of 162 business-to-business marketers
participating in a BtoB webcast during October
2008
4
BtoB Survey

• Amongst marketers who plan to increase spending,
  business-to-businesss three key media platforms
  will each benefit

BtoB online survey of 684 business-to-business
marketers conducted during the last week of
January and first week of Feb. 2008
5
Yankelovich/Harris Study1

• In spite of a down economy, virtually all
  executives acknowledge the importance of keeping
  abreast of new products and services in their
  industry, and continuing to invest for the
  future.
• Advertising in a down economy clearly creates a
  competitive advantage. The vast majority of
  executives agree that when they see a company
  advertising in a down economy
• It makes them feel more positive about the
  companys commitment to its products and
  services1
• More importantly, it also keeps those companies
  top-of-mind when purchase decisions are made1

1 2001 Yankelovich Harris Study
6
Yankelovich/Harris Study
of execs who agree with below statements
7
Yankelovich/Harris Study
of execs who agree with below statements
8
Yankelovich/Harris Study Conclusions

• More than 95 of executives maintain a high
  interest in learning about and investing in a new
  products and services even in a down economy
• Over 85 of executives believe advertising in a
  down economy is extremely important
• Executives react favorably to companies that
  advertise in a down economy the companies stay
  top-of-mind and are viewed more positively
• Executives are not about to let their guard down
  even during an economic downturn they must stay
  current on what is new in the industry and must
  position their organizations for the future.

9
Proactive Marketing for better business
performance

• The greater the proactive marketing of a firm
  during a recession, the better its a) Market
  performance and b) Business performance1
• Research on firm performance in hostile
  environments suggests that risk-taking may be
  necessary for survival and growth
• Firms that invest aggressively in marketing send
  a reassuring signal of confidence to concerned
  customers about their staying power and provide
  an incentive for customers to switch from
  brands/firms that they perceive as weak
• During a recession, reduction in input costs,
  combined with the increased marketing
  effectiveness of the proactive firm should result
  in improved business performance.

1 Pennsylvania State University ISBM Report,
Raji Sriniva, Gary Lilien, and Arvind Rangaswamy,
2002
10
Proactive Marketing for better business
performance

• Results confirm business press accounts of
  companies such as Dell, Microsoft, and BMW that
  view recessions as opportunities and exploit that
  perceived opportunity with aggressive marketing
  programs
• Proactive marketing has a strong direct effect
  on market performance even during the recession
  and an indirect effect (through market
  performance) on business performance
• Surprisingly, firms do not have to wait until a
  recession is over to realize benefits from the
  marketing investments they make during a
  recession

11
Conclusions of Previous Studies

• McGraw Hill Researchs Laboratory of Advertising
  Performance (LAP) analyzed the performance of
  600 business-to-business firms those firms
  which maintained or increased their advertising
  expenditures averaged significantly higher sales
  growth during and for the three years following
  the recession compared to those which eliminated
  or decreased advertising
• Firms which maintained or increased their
  advertising budgets during the recessionary
  period could boast an average sales growth of
  275 percent over the preceding five years 1
• American Business Press Study 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.2

1 McGraw Hill Laboratory of Advertising
Performance (LAP) 1985 2 American Business
Press 1974 75
12
Conclusions of Previous Studies

• Buchen Advertising Inc. tracked a large number
  of business to business companies sales and
  profits dropped off, almost without exception,
  at companies which cut back on advertising. Post
  recession, those companies continued to lag
  behind companies which maintained their
  advertising budgets.1
• - Harvard Business Review report of 200
  companies largest sales increases reported by
  companies that advertised the most during the
  recessionary year.2

1 Buchen Advertising Inc. 1949, 54, 58, 61 2
Harvard Business Review 1923
13
Summary

• Advertising aggressively in a recession can not
  only boost sales and market share, it can also
  open a lead on the more timid competition. It can
  skillfully reposition a product to take advantage
  of new purchasing concerns, give the image of
  corporate stability within a chaotic business
  environment, and give an advertiser the chance to
  dominate the advertising media.

14
Summary
When times are good, you should advertise. When
times are bad, you must advertise.