The Importance and Value of B2B Advertising During Times of Economic Uncertainty The Association of Business Information Companies 2010.

The Importance and Value of B2B Advertising During Times of Economic Uncertainty

The Association of Business Information Companies

2010

Introduction History has shown that companies who either steadily

continued or aggressively increased their advertising efforts during times of economic uncertainty: Experienced overall growth of their businesses at the

expense of their competition, who chose a more timid approach during times of economic uncertainty, and either cut back on or cut out their advertising budgets all together.

Experienced continual growth post the period of economic uncertainty (tracked post uncertainty for three years in most cases), and they gained a stronger position in their market and in the eyes of the buyer.

A survey conducted by BtoB in Oct/Nov 2009 amongst 376 B-to-B marketers has demonstrated that the importance of advertising during times of economic uncertainty has clearly resonated with marketers.



Decrease Budget13.3%

Increase Budget39.2%

Remain Flat

47.5%

‘BtoB’ Magazine Survey: 2010 Forecast*

Despite the current economic conditions, almost 40% of business-to-business marketers plan to increase their marketing budget in 2010.

*A copy of the full survey can be found at www.btobonline.com


‘BtoB’s “2010 Outlook: Marketing Priorities & Plans” Survey*

32

48

20

4

23

73

14

84

15

3 3

82

320

35

43

38

37 7083

20 2710 14

*Print *Online

Broadcast

Direct Mail*Events

Telemarketing

Radio Outdoor

For the following media, what are your spending plans in 2010:Increase

No change

Decrease

* Percentage of Marketers who will increase their budgets:

Online: 73% Events: 35% Print: 20%

*A copy of the full survey can be found at www.btobonline.com

Yankelovich/Harris Study 1

• In spite of a down economy, virtually all executives acknowledge the importance of keeping abreast of new products and services in their industry, and continuing to invest for the future.

• Advertising in a down economy clearly creates a competitive advantage. The vast majority of executives agree that when they see a company advertising in a down economy:• It makes them feel more positive about the

company’s commitment to its products and services

• More importantly, it also keeps those companies top-of-mind when purchase decisions are made

1 2001 Yankelovich Harris Study

1 2001 Yankelovich Harris Study


Percentage of executives

who agree with below statements

Yankelovich/Harris Study (Continued)

Even in a down economy, it’s important to keep abreast of

new products and services for your business

In a down economy, it’s important to continue to

invest to remain competitive in the future.

Q305 (Base: Total Respondents, n=505): Please tell me whether you strongly agree, somewhat agree, somewhat disagree, or strongly disagree with each of the following statements.


99%

97%

Percentage of executives

who agree with below statements

When you see a company advertising in a down

economy, it keeps them top-of-mind when you make purchase

decisions

When you see a company advertising in a down economy it makes you feel more positive

about the company’s commitment to its products and

services

Yankelovich/Harris Study (Continued)

Q305 (Base: Total Respondents, n=505): Please tell me whether you strongly agree, somewhat agree, somewhat disagree, or strongly disagree with each of the following statements.


86%

86%


Yankelovich/Harris Study: Conclusions

• More than 95% of executives maintain a high interest in learning about and investing in a new products and services even in a down economy

• Over 85% of executives believe advertising in a down economy is extremely important

• Executives react favorably to companies that advertise in a down economy: the companies stay top-of-mind and are viewed more positively

• Executives are not about to let their guard down even during an economic downturn: they must stay current on what is new in the industry and must position their organizations for the future.

Proactive Marketing for better business performance

• “The greater the proactive marketing of a firm during a recession, the better its a) Market performance and b) Business performance”1

• “Research on firm performance in hostile environments suggests that risk-taking may be necessary for survival and growth”

• “Firms that invest aggressively in marketing send a reassuring signal of confidence to concerned customers about their staying power and provide an incentive for customers to switch from brands/firms that they perceive as weak”

• During a recession, “reduction in input costs, combined with the increased marketing effectiveness of the proactive firm should result in improved business performance.”


1 Pennsylvania State University: ISBM Report, Raji Sriniva, Gary Lilien, and Arvind Rangaswamy, 2002


Proactive Marketing for better business performance(Continued)

• “Results confirm business press accounts of companies such as Dell, Microsoft, and BMW that view recessions as opportunities and exploit that perceived opportunity with aggressive marketing programs”

• “Proactive marketing has a strong direct effect on market performance even during the recession and an indirect effect (through market performance) on business performance”

• Surprisingly, “firms do not have to wait until a recession is over to realize benefits from the marketing investments they make during a recession”

Conclusions of Previous Studies

• McGraw Hill Research’s Laboratory of Advertising Performance (LAP) analyzed the performance of 600+ business-to-business firms: those firms which maintained or increased their advertising expenditures “averaged significantly higher sales growth” during and for the three years following the recession compared to those which eliminated or decreased advertising• Firms which maintained or increased their advertising

budgets during the recessionary period “could boast an average sales growth of 275 percent over the preceding five years” 1

• sdfss

• American Business Press Study: “Sales and profits can be maintained and increased in recession years and [in the years] immediately following by those who are willing to maintain an aggressive marketing posture, while others adopt the philosophy of cutting back on promotional efforts when sales appear to be harder to get.”2


2 American Business Press: 1974 – ‘751 McGraw Hill Laboratory of Advertising Performance (LAP): 1985

Conclusions of Previous Studies

• Buchen Advertising Inc. tracked a ‘large number’ of business to business companies: sales and profits dropped off, “almost without exception”, at companies which cut back on advertising. Post recession, those companies continued to “lag behind” companies which maintained their advertising budgets.1

• Harvard Business Review report of 200 companies: largest sales increases reported by companies that advertised the most during the recessionary year.2

The Association of Business Information Companies1 Buchen Advertising Inc. 1949, ’54, ’58, ‘612 Harvard Business Review: 1923

Summary:

Advertising aggressively in a recession can not only boost sales and market share, it can also open a lead on the more timid competition. It can skillfully reposition a product to take advantage of new purchasing concerns, give the image of corporate stability within a chaotic business environment, and give an advertiser the chance to dominate the advertising media.


Summary:

When times are good, you should advertise.When times are bad, you must advertise.


The Importance and Value of B2B Advertising During Times of Economic Uncertainty The Association of Business Information Companies 2010.

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