Reduced Advertising During Recession Negatively Impacts Consumer Perception

  • Jun 16, 2009

More than 48% of U.S. adults believe that a lack of advertising by a retail store, bank or auto dealership during a recession indicates the business must be struggling. Likewise, a vast majority perceives businesses that continue to advertise as being competitive or committed to doing business.

The latest Ad-ology Research study, “Advertising’s Impact in a Soft Economy,” analyzes consumer perception about businesses that continue to advertise, and those that do not, in the current economy.

The study finds advertising appears to play a key role in consumers’ view of how a business is doing, and by not advertising, businesses may be sending a warning signal to current and potential customers.

“It is critical to advertise in the current economic climate, to maintain long-term positive consumer perception of your brand,” said C. Lee Smith, president and CEO of Ad-ology Research. “Advertising not only assures consumers of a business’ reliability in a soft economy, but it can influence where and what they buy, especially when the ads address concerns about value,” Smith said.

When asked what they thought upon seeing that an auto dealer had reduced advertising, 50% thought they must be struggling, while only 8% thought they must be doing well. While this study was done earlier this year, before the worst of the worst news came out about America's “Big 3”, the lesson is an important one for the surviving independent dealers. They might also consider that their traditional advertising venues - TV, radio, and newspapers - are, by far, the most expensive. Promotional products, on the other hand, offer the lowest cost per impression. With tight budgets during recessionary times, that becomes more important than ever.

Ad-ology study of consumer perception says keep advertising