Hey... Even that is not yielding desired results

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In fact, since the worst sufferers of the recession have been financial service companies, the category as a whole has cut back their ad spends by more than 27%, and the back is led by credit card and insurance marketers specifically. American International Group (AIG) which spent $118.7 million in 2007 and $64 million in the first half of 2008 on advertising, has announced that it will pull its corporate advertising for the remainder of the year (interestingly the call off will save them 0.1% of the $85 billion bridge loan from Paulson, Bernanke & co.). What’s more, if the Citi-Wachovia deal does not work out, the former will apparently hold back $542 million of its ad spend. Simply glance at Table I on pg. 30 and you’ll realise that the advertising sentiment is on a downswing across sectors in the great American market. Procter & Gamble – America’s biggest ad spender by far has cut its ad expenses from $1,613 billion in 2007 to $1,490 in 2008; AT&T jogged down its ad ex from $1,113 to $940 in the same period. Clearly, the pants of every big American brand are on fire and they are rushing to Madison Avenue and slashing ad budgets to douse the flames.

Good news however is ‘round the corner. Takeover giants like Barclays Plc (which has picked up stake in Lehman Brothers), Bank of America (Merrill Lynch) and JP Morgan Chase (Bear Sterns and Washington Mutual) are expected to step up their advertising expenses to educate their new customer base, given that all the fallen giants have now opted to move into traditional commercial banking too. In fact, given their falling popularity and consumer confidence level, advertising and building back their brand equity is perhaps the only survival mantra left for them to explore.

Increasing ad spends during recession time can be a good thing says David Haigh, CEO, Brand Finance. He believes that well managed brands now recognise that cutting advertising and marketing spend in recession results in market share loss as the economy recovers. “Whether in traditional or new media the power of advertising remains strong. Companies maintaining and increasing their ad spend despite recession have grown both enterprise and brand value significantly and vice versa,” he points out. Clearly, for American behemoths who want to increase their share of the overall market pie, it is indeed the best of times and perhaps also the worst of times! Charles Dickens would surely be smiling benignly from up there!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.

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