Research on Advertising in A Recession is the title of an article by Gerard Tellis and Kethan Tellis which was published in Journal of Advertising Research in 2009 in the middle of the last recession.  You can download a copy of the paper for $20 from the Journal of Advertising Research website.  Here are the highlights.

Tellis and Tellis reviewed 40 different studies and papers on advertising and recessions across 37 different countries.  The key findings:

• Advertising spend is highly correlated with GDP.  A 1% decline in GDP means a 1.4% decline in ad spend.  Most firms misguidedly cut advertising in response to a recession.
• There is strong consistent evidence that cutting back on advertising during a recession hurts sales during and after the recession without generating any increase in profits.
• Firms that increased advertising during a recession experienced higher sales, market share or earnings during or after the recession.
• Tellis and Tellis conclude:”…the most compelling reason to increase advertising during a recession is the following: most firms tend to cut back on advertising during a recession.  This behavior reduces noise and increases the effectiveness of advertising of any single firm that advertises.  Thus, the firm that increases advertising in this environment can enjoy higher sales and market share…The gains of the firms that maintained or increased advertising during a recession persist.

Insider’s take:  A great read to familiarize yourself with the reasons why your clients should keep advertising in a recession.

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