80 years of research tells us so……….

I have just spent a highly energetic day with the sales teams from three local radio stations here in Yorkshire.

Our topic of conversation was how to thrive in the challenging times ahead and the purpose of today’s blog is to summarise some of the research used in my presentation to the group. But before we get into that my first thoughts are to congratulate the management team of radioaire, vikingfm and hallamfm for holding such an event when many other companies are postponing or cancelling such training.

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radioaire sales team smiling through the storm

 In the words of Nicky Pattinson, a fantastic motivational speaker who kicked off  the day for us, “sales people are the only people who are going to get us out of this mess”.

My sentiments exactly Nicky!

Anyway here is a summary of some of the key research into advertising effectiveness undertaken since the 1920’s. The quality of research methodology varies across the decades but the message is pretty consistent.

Research

Date

Key Findings

 

Roland Vail report on the performance of 200 companies during downturns.

Published in the Harvard Business Review

 

1923

 

Companies that advertise the most during a downturn make the greatest gains in sales.

 

Buchen Advertising inc

 

1947-61

 

Sales and profits dropped off at companies that cut back on their advertising. Also after recession those companies continued to fall behind the ones that had maintained their advertising spend

 

 

Meldrum &Frewsmith

 

1974-75

 

Same research same results

 

McGraw Hill.

Laboratory of Advertising Performance Report

 

1986

The results showed that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were Aggressive Recession Advertisers had Risen 256% over those that didn’t keep up their advertising.

 

 

The Billet/AGB report

 

1993

 

During a study of 127 Brands during the 1991-92 recession brands that increased advertising expenditure by 7%  gained on average a 1.1% market share while those that decreased advertising by 8 % lost an average of 1.6%market share

 

Bain and Company

 

2002

 

In a study of over 700 companies the 1991 recession The Bain Study showed that more than a fifth of companies in the bottom quartile in their industries jumped to the top quartile during the last recession. Meanwhile, more than a fifth of all “leadership companies” (those in the top quartile of financial performance in their industry) fell to the bottom quartile. Only half as many companies made such dramatic gains or losses before or after the recession.

 

 

Frankenberger & Graham

 

2003

 

Their results indicate that advertising creates a firm asset by contributing to financial performance for up to three years in the future. Further, increasing spending on advertising during a recession leads to benefits that exceed the benefits of increasing advertising during non recessionary times.

 

 

 

There are endless stories of the companies that have heeded this advice and those who have not.

 

We looked at examples of advertisers who made most of the recession including Kelloggs, Habitat, Black Magic and Virgin. Every company has their own examples and stories of clients who have taken the longer term view and succeeded. The research is interesting and useful but it is the stories that you tell that are most persuasive.

 

Those of us who sell products that are easy to cut, advertising and training being two key examples, must make sure that the clients really understand the true implications of making the cut as well as the advantages to be gained in terms of sales and market share in the short term and in the long term.

 

 

Written by paul in: Sales, Business Development, Customer Service, Start-ups and Entrepreneurs