A Big Budgeting Mistake That Struggling Businesses Make…

I know from experience that this is a bad idea. Don’t do it. It’s seriously not worth it in the short run and especially in the long run..

So let me ask you, if your business is struggling, what do you do to stay afloat? (Since we’re in a depression right now, I could replace “if” with “since”)

Right! You cut costs. You pull back on heavy spending, streamline your processes, sell more big-ticket items, cut inefficient labor, and cut back on any not-so-immediately-vital expenses. You know, pushing some heavy cost control…

But what else are you tempted to cut back on?

Right! Your marketing. But this is a huge mistake…

David Ogilvy, in Ogilvy On Advertising, shows a study conducted of companies’ sales performances during the 1970’s recession and up to 5 years after the recession ended. The graph divided companies that kept their advertising consistent during the recession from companies that cut their advertising during the recession.

The study revealed that the companies that stayed consistent in their advertising during the recession outperformed (more sales) the companies that cut their advertising during the recession. They continued to vastly outperform them 5 years after the recession was over, even when the companies that cut their advertising during recession increased their advertising after the recession was over!

That means if you cut back your advertising during a recession, you’ll needlessly lose sales during the recession, and keep losing sales long after the recession passes!

I made this mistake and have seen other businesses hurt by doing it too. You’re messing up bad by cutting your advertising during recessions. Keep your advertising consistent during recessions and depressions instead.

You can cut advertising costs by trying to reach as many people more efficiently. You can also keep track of response rates better to see which ads work and which don’t. But whatever you do, don’t cut back on your effective ads! You’ll regret it!

Why is this? I’m not sure, but it might have to do with short attention spans, so customers will forget about you. Maybe you lose authority and your reputation,so you might land back in square one when you promote again. Maybe competitors successfully convert your former buyers by appealing to their changing needs and conditions. Who knows…

Either way, recessions should be a time your business invests in improving your advertising and adapting to customers’ changing needs, but that’s we’ll talk about how to do that in another post…

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