Wednesday, April 22, 2009

Advertising During a Recession

My colleague Keith Murray passed along this insightful piece by James Suroweicki, published in The New Yorker. Suroweicki, of course, is the author of the wonderful book, The Wisdom of Crowds. This article addresses the issue of the impact of cutbacks in advertising during a recession. Here's an excerpt:

A study of advertising during the 1981-82 recession found that sales at firms that increased advertising or held steady grew precipitously in the next three years, compared with only slight increases at firms that had slashed their budgets. And a McKinsey study of the 1990-91 recession found that companies that remained market leaders or became serious challengers during the downturn had increased their acquisition, R. & D., and ad budgets, while companies at the bottom of the pile had reduced them.