Advertising and Brand Loyalty in the Recession
Advertising Age just posted a couple of interesting articles: Spending Fell (Only) 2.7% in '08. The Real Issue: '09 and Package-Goods Brands Lose Loyalists in Recession. The first one mentioned that although advertising spending dropped only 2.7% in 2008, that was broken down quarterly as follows.
U.S. total measured media spending followed a generally similar trend but with deeper declines: Up 0.6% in first quarter 2008, down 3.7% in the second quarter, down 2.0% in the third quarter -- and then down a seismic 9.2% in the fourth quarter and 14.2% in this year's first quarter, according to TNS.
The first article further reported that Proctor and Gamble, the nation's largest advertiser, dropped their spending by 6.6%, while Walmart Stores, the nation's (newly) fifth largest advertiser, increased their spending 15.9%, including a huge "66.5% increase in measured media spending on their flagship Walmart chain."
Contrast this information with the second article, which reported a study that more than a third of formerly faithful consumers abandoned major brands like Crest, Cheer, Pinesol, Tylenol, etc. Crest and Cheer are P&G brands, which saw brand loyalty decline during the recession at the same time they were dropping their advertising. Interestingly, Tide held onto its loyalists much better than brands like Cheer and Wisk, but also vastly outspent them in advertising.
So, what are the conclusions? Unfortnately, there is not enough data here to make one, but there is certainly enough data to raise questions. And there is certainly enough internal data for the marketers at P&G and others to analyze the relationships. However, if I were a betting person, I would wager that there is a strong correlation between the numbers in the two articles.
Domus, a full service advertising, public relations, and internet marketing firm based in Philadelphia, has a long history of marketing in the consumer packaged goods environment (as well as others). Exploring the relationships between advertising dollars and marketing mix vs. the final sales is a fundamental responsibility in marketers' feedback loop, a responsibility that Domus has effectively executed for many years. For more information, please visit our web site at http://www.domusinc.com.
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