With corporations under enormous pressure to control costs, advertising budgets often appear to be a dispensable luxury in the struggle to survive. Executives who succumb to that temptation, however, put the long-term future of their companies at risk, according to Wharton faculty and advertising experts.

“The first reaction is to cut, cut, cut, and advertising is one of the first things to go,” says Wharton marketing Professor Peter Fader, adding that as companies slash advertising in a downturn, they leave empty space in consumers’ minds for aggressive marketers to make strong inroads. Today’s economy “provides an unusual opportunity to differentiate yourself and stand out from the crowd,” says Fader, “but it takes a lot of courage and convincing to get senior management on board with that.”

According to research, while price is important in a recession, the majority of price-driven consumers still factor in the importance of branding. Companies must maintain “good housekeeping” during a recession, such as product quality and good distribution systems, but suggests that clear brand association and leadership comes through communication. If you cut the communication, you have a major problem.

Experts urge marketers to make sure they understand the “elasticity” of their brand, which would be a gauge of how much–or how little–advertising is necessary to sustain sales. They also warn that in today’s networked, digital marketplace, consumer buzz about disappointments with a product can metastasize quickly and widely. “You must give people good things to talk about by continuing to have good products and communication”, says Fader. The biggest lesson is that recessions come and go, but “hopefully your brand is for life. It’s forever. So you have to be careful how you react because the recession is not going to be forever.”

If companies cut deeply into advertising and communications in a down period, the cost to regain share of voice in the market once the economy turns around may cost four or five times as much as the cuts saved. You must really keep a balance in times like this. Don’t go dark when customers and consumers need you because they need you as much as you need them. 

An economic slump may be a time to reconfigure the advertising mix between traditional media and digital or other outlets, depending on the product, brand positioning and overall corporate strategy. You don’t have to put a huge amount of money in the marketplace. Lower-cost marketing techniques might merit new attention. When times are flush, it is easy to pay a premium for more expensive established media.

All forms of media can be successful even in a recession, although the impact of digital marketing might be easier to quantify and therefore able to withstand the close scrutiny of senior executives demanding justification for any spending while their operations are under recessionary pressures.

Excerpt taken from Knowledge Wharton on www.forbes.com

Gregory Sander