Concept Company

In 1947, Buchen Advertising tracked annual advertising expenditures for multiple companies. They studied spending to sales trends before, during and after the 1949 and 1954 recessions. They also studied sales and profits trends surrounding the 1958 and 1961 recessions. The results: sales and profits dropped off at almost all companies that cut back on advertising. The drop offs continued even after the recessions ended.

The American Business Press and Meldrum & Fewsmith studied the 1970 and 1974-75 recessions. They found positive results of advertising aggressively during recessions — advertising not only increased sales but also increased profits. For the 1974-75 recession, they found that those who did not cut advertising expenditures during the recession experienced higher sales and net income during those two years and the two years following than those who cut in either or both recession years.

During the 1974 recession, McGraw-Hill Research studied 468 industrial companies. In the 1981-82 recession, they studied 600 industrial companies in 16 different industries. Their findings indicated that companies that increased or maintained advertising spending averaged significantly higher sales growth, both during the recession and for the following three to five years than those who eliminated or decreased advertising.

Source: Strategic Marketing