Should I be spending money on advertising during COVID-19?

Should I be advertising during an economic downturn while my business is strapped for cash? 

It seems like every American has been impacted by the corona-virus in one way or another. There is no doubt that it has impacted virtually every business in the country as well. For most businesses this is a major pivot point for their organization that has been imposed onto them by unforeseen outside forces. 

The reality is that many businesses will fail during this time, mostly due to limited capital and sabotaged cash flows. Big clunky corporate giants may fall due to lack of flexibility as well. 

Steve Jobs famously said “Innovation is the ability to see change as an opportunity – not a threat”.

The reality is also that many businesses will come out of this uncertain time thriving more than ever. This is a period where businesses are being forced to pivot in ways that otherwise they never could have imagined.

It may be expensive, risky, and ambiguous. But it is necessary. This is a time to enhance relationships with customers and a time to gain market share.

Factors that make this era unique for advertising

This is unlike any other recession that the US has faced because it is causing a majority of the workforce to stay at home.

Many people have been spending much more time with their families during this time, and many people have been spending most of their days by themselves. Another unique factor during the corona-virus pandemic has been that this is the most technology advanced downturn that we have ever faced as a country, thus framing this pandemic to be the most communicative economic downturn faced in history.

Because of all the technology that is being leveraged for video-chats and phone calls during this time, it feels like everyone is so close to each other yet so far away from each other at the same time. 

Between the pandemic, political landscape, and overall state of the US, consumers attention is in their devices, thus the most practical and effective way to reach consumers during these times is through devices that are in their house. 

Holding off on advertising during a recession is not a good move for the long-term

As shown in a report of key findings from the 2008 IPA seminar, advertising during a downturn is a smart move for the long-term.

The longer you hold off advertising the more significant the impact will be on your bottom line. Reducing marketing budget during a downturn will only protect profits in the very short-term. 

The chart below demonstrates that the longer that companies hold off on marketing during a downturn, the bigger the negative impact on their sales over the next few years. This is a prime example of “missing the boat”. 

Why advertising during tough economic downturns works

There is less noise, and you are competing with less competitors while advertising. This decrease in demand drives down the price to advertise, especially on digital platforms, which can either lead to increased reach or more efficient ad spend. 

Consumers choose to consume goods or services from organizations that they feel connected with. Wouldn’t it make sense to connect with previous and future customers during a tough time? Chances are they will remember that when things are going well for them.

This is a great opportunity to make that connection and build that relationship. Demonstrating humanity through advertisements and through behavior could significantly assist in building upon relationship with customers during the COVID-19 pandemic. 

Scholars Peter Dickson and Joseph Giglierano have argued that organizations need to be cautious of two kinds of potential failure: “sinking the boat” (destroying the company by making a bad decision) or “missing the boat” (not taking advantage of a great opportunity). This simply means that risks need to be handled in a calculated manner, and must be taken to ensure success.

In a weak economy, there are opportunities to reach customers in ways that are not always possible when the economy is strong. Chances are you will find some good deals on advertising during these tough times as well.