Impact of Ad Spending

Part
01
of two
Part
01

Impact of Ad Spending: Part I

Three brands that invested in marketing campaigns during a recession are Nike, Domino’s Pizza, and Kellog’s. Nike focused on making their brand more inclusive while Domino's Pizza dedicated this time to market research and developing a new recipe. Kellog's used the Great Depression period to increase its marketing efforts and create value deals while its competitors reduced their marketing activity.

NIKE

  • Following the 1987 stock market crash, Nike was able to triple its marketing budget and get profits nine times higher than before the crash.
  • In 1988, Nike's executives and marketing specialists realized that the brand was only targeting high-ranked athletes for their sportswear.
  • They decided to include all persons in sports and fitness, launching the “Just Do It” campaign in 1988.
  • In launching this campaign, they predicted spending over three times the $5 million figure they had for the previous campaign “Revolution.”
  • This launch would make Nike become a major network television advisor.
  • The core of the campaign was the “Just Do It” slogan, selling the idea that anyone could be an athlete, thus, making the brand appealing to everyone.
  • After its launch, Nike’s sales moved from $877 million to $9.3 billion.

DOMINO’S PIZZA

KELLOGG’S

  • During the Great Depression that took place between 1929 and1939, Kellogg's benefited from its aggressive marketing in a time when all their competitors reduced their marketing efforts.
  • Consumers didn’t stop spending altogether during the depression but instead focused on brands that offered good deals for valuable products. Companies providing these good-value deals were the ones that benefited during this time.
  • Kellog’s doubled its advertising budget while Post, its competitor during that time, reduced theirs. Kellog’s used this to their advantage, diving deep into radio advertising and pushing its new Rice Krispies cereal.
  • Despite the terrible recession occurring, by 1933, Kellog’s had increased their sales by 30% as a result of their increased advertising strategies.
  • Following the 2008 recession, Kellog’s launched numerous marketing campaigns. During this period, they also turned to social media marketing, using Twitter and Facebook for advertising purposes.

RESEARCH STRATEGY

We began our research of the three brands that increased marketing during a recession by marketing websites like BSO Multimedia and Strategic Growth Concepts. We also visited news articles from sites like Entrepreneur.

After finding our three brands, we further dove into their history by checking expert blog pages, news articles, and marketing websites. Strategic Growth Concepts and Branding Strategy Inside provided information about Nike during the 1987 recession. We found their marketing strategy during this period and the effects of their efforts compared to their competitors.

We also found case studies about Domino’s Pizza on articles by the Guardian and Forbes. These articles provided information about Domino’s strategy and the results they got from their efforts. Finally, we found information about Kellog’s marketing strategy during the Great Depression on blog websites like Spin Sucks and Polr. We also found the actions taken by Kellog’s during this period and the results that came from this.

Part
02
of two
Part
02

Impact of Ad Spending: Part II

Two brands that invested in marketing campaigns during a recession include Toyota and Samsung. Toyota adhered to its long-term strategy and did not drop its target advertisement budget. The sales of Toyota in the United States and other parts of the world continued to increase during the recession, which occurred between 1973 and 1975. Samsung invested more in marketing and went on to hire senior marketing executives from other consumer companies, including L’Oreal during the 2009 recession. Interbrand’s global list reveals that Samsung ranked number 21 in terms of brand value at the beginning of the recession and number 6, after the recession.

TOYOTA

  • An energy crisis spearheaded the seventeen-month recession that occurred between 1973 and 1975.
  • Towards the end of 1973, the United States government released its first miles-per-gallon performance report. Honda Civic was first, while Toyota Corolla was second in terms of fuel efficiency.
  • Toyota was enjoying strong sales before the economic downturn hit and was tempted to drop its target advertisement budget. However, Toyota resisted and continued implementing its advertisements.
  • The adherence of Toyota to its long-term strategy helped it to eventually surpass Volkswagen by becoming the top imported car brand in the United States by 1976.
  • Without dropping its advertisement budget throughout the seventeen-month recession that occurred between 1973 and 1975, the sales of Toyota products improved.
  • In 1973, the net revenue of Toyota increased to ¥2.288 billion from ¥1.995 billion recorded in 1972. The revenue of Toyota increased to ¥2.617 billion in 1974 and ¥2.802 billion in 1975.

SAMSUNG

  • To enhance its presence during recessions in the United States, Samsung took to aggressive tactics before and during such recessions. Samsung doubled its R&D investment at a time when competitors aggressively lowered expanding in that area. Samsung also increased its filled patents fourfold in the United States. The company also embarked on the construction of about four types of R&D centers, each having a defined product focus as well as investment horizon.
  • Samsung also maintained its marketing investments and even hired senior marketing executives from other consumer companies, including L’Oreal. This marketing strategy rebranded Samsung and helped position its Galaxy smartphone during the 2009 recession.
  • Samsung Galaxy was able to successfully campaign against its competitors, such as the Apple iPhone. When the last recession, commenced, Samsung ranked number 21 in terms of brand value on Interbrand’s global list, after the recession, the company ranked number 6. This change in ranking represents a significant improvement in brand value enjoyed by Samsung through the recession.
  • Samsung experienced strong smartphone sales growth between 2009 and 2011, with a 38% year-on-year growth in 2011. Samsungs smartphone sales revenue reached $10.17 in the fourth quarter of 2009, and 12.11 trillion for the same quarter in 2011.

APPLE

  • The period between 2007 and 2009 was marred with a recession and global financial crisis which affected spending in the United States and other parts of the world.
  • Apple spent $338 million on advertising in 2006, in 2007 the advert spending rose to $467 million, $486 million in 2008, and $501 million in 2009.
  • Apple increased its spend on advertising in 2009. Steve Jobs, the founder of Apple, laughed off the recession as his company reported record sales as well as near-record revenues for the fourth consecutive quarter in 2009.
  • Wall Street and several companies operating in the technology industry recorded revenue declines in 2009. However, Apple’s revenues rose for the fourth consecutive quarter to the sum of $9.87 billion.
  • Apple's sales record reveal that 3.05 million Mac sales happened in the first quarter of 2009 (17% year-on-year increase). About 10.2 million iPods (down 8%), while 7.4 million iPhones (up 7%) was recorded in the fourth quarter of 2009.

RESEARCH STRATEGY

The research reviewed press releases, market publications, etc., for case studies of brands that invested in marketing campaigns during a recession. Recent sources revealed that Toyota and Samsung are some companies that have spent on marketing campaigns during a recession. A study of recession timeline revealed that the most recent recession occurred more than two years ago. Thus, to get detailed statistics of the advert records and impact of the advertisements that took place during those recessions, we reviewed some resources greater than two years old. (The most recent recession occurred more than four years ago). We avoided repeated the trends identified in our previous research and related strategy documents.
Sources
Sources