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Advertising
through a
recession

Advertising through a recession. 1

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Executive summary
The coronavirus pandemic threatens to
plunge the world into the deepest and
longest recession for almost a century.
Not only is it predicted to be more severe and more
all-encompassing – in terms of categories and
countries – than any recession in living memory.
The growing lockdown of free movement of citizens
will also make it unlike any other.
Brands that are still able to trade effectively in these
extraordinary circumstances are looking for guidance
on what marketing they should undertake during the
pandemic, during the recession that will follow, and
afterwards.
Additionally, brands that have no choice but to go
dark, or anything but, are looking for guidance on
how best to return to the market. In this paper, we
only consider this in general terms, but we plan to
return to this in more detail in future papers.
Advertising through a recession.
While it is in theory attractive to turn off marketing
investment, historical precedent suggests that brands
that thrive during and after a recession are those that
sustain and even increase marketing spend.
“Going dark” and focusing on short-term price
promotions are in fact counter-productive strategies.
They erode brand equity measures, stifle growth, and
put brands at competitive disadvantage. They also
make it incredibly challenging to retain price premiums
that brands take years of long-term brand building
investment to secure.
Wherever possible, the message is clear: brands
should hold their nerve and invest for long-term
success during and after the recession.
2
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Market context
Regularly throughout the history of global Figure 1. Impact of recessions on U.S. GDP, 1900-20101
trade and industrial output, the world has United States Real GDP
faced periods of temporary decline in %, total draw-down from previous peak
economic activity. 0

Businesses and consumers spend less, markets get

spooked and jump around precipitously, companies go -5

bust, and many lose their jobs. A recession is defined as

a period of temporary economic decline characterised -10
by a fall in Gross Domestic Product (GDP) for at least
two, successive quarters.
-15

Since the end of World War II – and the growth to

maturity of advertising and other forms of commercial -20
communication – there have been an estimated 11
recessions. Typically they last two or three quarters,
-25
on average around 11 months. The most severe of
the post-war recessions was the great recession
of December 2007 to June 2009, triggered by the -30
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
sub-prime financial crisis. During this time, GDP in
the U.S. – the world’s largest economy – declined
by more than 5%. Pre-WW II Post-WW II

1
Source: Historical Statistics of the United States, Volume 3, Bureau of Economic Analysis ;McKinsey Covid-19 Analysis.

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As we write this paper in April 2020, much of the Figure 2. Collapse in spending intent from purchasing managers worldwide2 China
US
world is on lockdown in a concerted effort to tackle UK
United States Real GDP
coronavirus, arguably the first severe global pandemic %, total draw-down from previous peak Japan
Euro Area
since Spanish Flu in 1918. While many office-based,
60
knowledge-economy jobs have transitioned almost Growth
seamlessly to remote working, whole sectors of the
55
economy have ground to a halt: travel and holidays,
all forms of entertainment and hospitality – from 50
restaurants to cinemas, live sport to coffee shops –
automotive, gambling driven by sport, and real estate. 45
Governments are pledging fiscal protection packages
like never before, from $330bn in the U.K. to $1.8tn 40
in the U.S.
35

In this period of intense uncertainty, one consequence

of the COVID-19 pandemic that seems very likely is 30

that the world will enter a period of painful, sustained

25
economic decline. With more than a third of the
world’s citizens currently confined at home, the Decline
20
coronavirus recession is likely to be longer and deeper May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
'18 '18 '18 '18 '18 '18 '18 '18 '19 '19 '19 '19 '19 '19 '19 '19 '19 '19 '19 '19 '20 '20 '20
than any recession since the depressions of the 1920s
and 1930s, which culminated in the Great Depression Note: A value of above 50 indicates growth, a value below 50 indicates decline. Larger/smaller values signal severity.
March data are flash results. Source: IHS Market Purchasing Manager's Index.
of 1929-1933.
2
WARC Global Ad Trends (March 2020), FMCG & COVID-19, https://bit.ly/3dCxfEB

Advertising through a recession. 4

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The pandemic is already affecting different sectors able to trade – from offline and online retailers The World Advertising Researcher Center (WARC)’s
in different ways. Just looking at the collapse in to consumer goods manufacturers, from media latest Global Ad Trends for March 2020 reports that
purchasing managers’ intent to spend (Figure 2., businesses to financial services companies – are UK broadcaster ITV expects ad growth to be down
page 4) and conversion rates across key industry actively looking for guidance on what they should by around 10% during 2020.4 Outdoor specialist JC
verticals (Figure 3., below) demonstrates the extent to do in terms of marketing investment both during Decaux is anticipating that ad revenues will be down
which this is occurring. Those advertisers who are still the downturn and once the pandemic is over. by a similar percentage. In China, internet giant Baidu
has advised that Q1 2020 revenue may be down
as much 18%. But spend will not be down for all
Figure 3. Change in web traffic as a result of Covid-19, by sector3 categories, and FMCG, retail – and particularly online
retail – are likely to weather the gathering storm.
80%
Food

60% Brands spend on average around 10% of revenue

Healthcare

on marketing – B2C brands almost 16%, B2B just

Transportation
Manufacturing
E-Commerce

Construction
40%
under 9%5 – and media represents around a third

Real Estate
Pharma

Advertising
Technology

Agriculture
Media

Education
Insurance

Software

Telecoms

of all marketing spend, making it the biggest single

Finance
Energy

20%

Travel
Retail

line item in many advertisers’ budgets. When the

0%
CFO comes looking for savings to protect margin
-20% and minimise damage to the bottom line, media
and marketing budgets are on obvious and easy
-40%
target. The question is, is it smart to cut marketing
-60% investment during a recession? We have written
this paper to help marketers make the right
decisions for their brands in the long term.
3
Ubersuggest survey, 17 March 2020, 4 WARC Global Ad Trends (March 2020), FMCG & COVID-19, https://bit.ly/3dCxfEB
5
Annual CMO Survey data for 2020 – see https://bit.ly/2QMxtPF

Advertising through a recession. 5

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What we can learn

from history
Although it is tempting for brands to cut ad Looking back over past recessions, it is clear that they have lost by advertising less – and in some
spend during a recession, the evidence from brands typically reduce their spend more than GDP cases “going dark” completely – as GDP contracted.
recent periods of sustained economic decline actually shrinks as a result of a recession. Figure 4. While largely driven by financial forces, this tendency to
suggests that it is a false economy to do so. shows both the tendency to cut deep in times of cut deeply, then overinvest later, is also a consequence
recession and invest heavily immediately after a of a misunderstanding of how best to optimise
Indeed, it is so attractive that often companies cannot recession, in attempt to make up for the ground marketing spend.
resist. In a survey published in March 2020 by
Marketing Week, 60% of respondents said they were
delaying or reviewing ad spend commitments for the Figure 4. Media investments follow rises and falls in GDP, with more extreme movements GDP
Ad Expenditure
rest of this year in light of the coronavirus pandemic.
15
55% were delaying campaigns or putting them under
review, and the same proportion said they had paused
10
product or service launches.6 Ebiquity's own client
data suggests brands may reduce spend by as much
as ~20% versus what was planned at the start of 5

the year.
0
70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6

-5

-10

-15
6
https://bit.ly/2vQBeMK

Advertising through a recession. 6

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Figure 5. Changes in market share (percentage points) Typically, however, companies that sustain investment
for brands cutting, holding, and increasing marketing during a recession do better relative to competitors
spend during recessions, 1980s-early 2000s7 during the period of recession and grow more quickly
once the recession is over. Figure 5. shows that those
1.6 brands that cut ad spend see their market share shrink
once a recession is over, typically by around 0.7%.
1.0 Those that maintain spend are the benchmark, while
Increase those that increase spend when times are toughest
0.7 Spend
enjoy an increase in market share of 1.6%. The counter-
Maintain
Cut Spend intuitive message is clear: where you still have access
Spend to customers, do whatever you can to sustain
investment when times are tough.
Brands that maintain or increase spending do better
during a recession because their relative share of voice
(SOV) increases in comparison to their competitors
who scale back investment, which in turn grows their
share of market (SOM). And they do better once the
recession is over because they can sustain both
increased SOV and SOM, which are strongly related.
It can take brands up to five years to recover from
budget-cutting during a recession.8 What’s more,
bigger brands with a large market share can sustain
this with a lower SOV relative to smaller competitors.9

7
 ource: PIMS – the Profit Impact Marketing Strategy database, https://bit.ly/2xws8p5
S
8
Peter Field (2008), “Marketing in a downturn: lessons from the past”, Market Leader Issue 42, https://bit.ly/3bw8zMm https://bit.
9
Professor John Philip Jones (2001), The Ultimate Secrets of Advertising, SAGE Publications, Thousand Oaks, CA

Advertising through a recession. 7

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Given the likely severity of the imminent global
recession, increasing spend is not likely required to
achieve a similar outcome as in past recessions. Given
the scale of this recession, combined with significant
increases in media consumption exaggerated by
working from home practices and sudden
unemployment in certain sectors, media prices are
likely to deflate in most major markets around the
world. We’ve written about this in more detail –
including looking at recent media consumption
data from around the world – on our blog
(https://ebq.news/media-habits).
Advertising through a recession.
The established principle – that it makes long-term
commercial sense for brands to spend their way
through a recession and to continue to do so once
the recession is over – is likely to be accentuated after
the coronavirus recession. This is because the recession
is expected to last longer and be deeper than any
recession for almost a century, with many markets
shrinking by 20% and more. Brands that thrive and
survive during and after the imminent recession will
need both deeper pockets and to hold their nerve for
longer. But historical precedent suggest that it will
be worth it in the long term.
8
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Recession and lockdown:

a double-whammy
It clearly makes little sense for brands to
advertise products right now that no one can
buy. No-one would advise an airline to spend
big right now, nor a car manufacturer, or a
quick service restaurant chain.
Historical precedents suggest that “going dark” for up
to six months is typically not damaging in the long-
term, and governments are starting to suggest that
countries and markets should take no longer than that
period to “return to normal”.
Past studies indicate that, if budgets allow,
spending should continue and ideally increase
during the recession that follows. Based on Ebiquity’s
econometric analysis, the insight would be that most
auto manufacturers should maintain or increase
advertising investments if they measure the full short
and long term effect of advertising. Continuing to
spend when the chances are that the competition
will reduce spend renders your own spend more
efficient than it otherwise would be.

The concern that many brand owners will have right

now is that a period of zero demand –consider the
auto industry, as no-one is going to shuttered car
dealerships – will likely be followed by a period of
depressed demand caused by a deep recession.

Advertising through a recession. 9

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The perils of shifting spend

into short-term promotions
Repeated studies by the leading thinkers in
marketing effectiveness, Binet and Field,
have shown that the optimal balance of
spend is 60% on long-term brand building
and 40% on short-term sales activation.
Different categories benefit from different investment
ratios, but a 60/40 split is a good rule of thumb. It also
reflects our own analyses over more than a decade in
the Ebiquity marketing effectiveness databank.
The increasing dominance of digital media channels
in many brands’ marketing mixes has undermined this
ratio. This is reflected in the marked increase in short-
term entries to the IPA Effectiveness Awards over
the past 20 years, with many brands overinvesting in
sales activation at the expense of brand building. This
is further reflected in the decreasing number of very
large business effects in award-winning campaigns
every year since 2012. Put simply, advertising is
becoming less effective as brands spend too much
on short-term sales activation and too little on long-
term brand building.

Figure 6. Net effect on brand health six months after cutting TV ads In a recession, brands are much more likely to invest in
price promotions and sales activation activities to drive
TBCA Total Buy Buy First Key Total Brand Trial
Mentions Nowadays Most Often Mention Image Awareness top line revenues. This comes, however, at the expense
-3 of bottom line profitability. This, too, is a mistake. The
-8 -5
-11 -9 switch from long-term to short-term is a false friend
-13
-21 that actually erodes brand equity, a measurable
contributor to overall sales performance. This is shown
-39
in Figure 6. from Kantar’s March 2020 COVID-19 brand
barometer.

(632) (836) (376) (501) (627) (232) (840) (744)

Source: Kantar "COVID-19 Barometer," March 2020. (Base number of brands analysed in parentheses.).

Advertising through a recession. 10

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What’s more, price-focused campaigns also deliver less Figure 7. The Direct Line Group experience: price-focused campaigns Short Term
sales impact long-term, as evidenced by the award- look good short-term but have poorer impact overall Long Term
winning work done by Ebiquity’s Analytics practice for
the leading U.K. insurer Direct Line Group, as shown in
Figure 7.10 Just 18% of sales impact occurs in hours or New propositions
days, driven by sales activation activity and measured
using digital attribution techniques. Meanwhile, 42% Brand led campaigns
of sales impact comes from brand building activity
over weeks and months, which market mix modelling
Range discount
can assess. And fully 100% of sales impact from
the right mix of short-term sales activation and
Product discount
long-term brand building can be analysed by brand
equity modelling.

10
‘They went short, we went long’ won IPA Effectiveness Gold in 2018 and the Channon Award for
“a research technique that created the best new learning in advertising”. See WARC summary https://bit.ly/2JiXSAE

Advertising through a recession. 11

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The impact of “going dark” on
retaining brand price premiums
In a recession, financial pressures across a
business can make the pressure to “go dark”
– to switch off all advertising – irresistible.
Cutting media and marketing spend saves cash
short-term, and the impact often isn’t noticeable
for the first six months or so. For brands with no
or few competitors, the impact may not be felt for
a year. But then it is. And in competitive markets,
it’s felt sooner, particularly if competitors sustain
or increase spending, growing both their shares
of voice and market. For when brands go dark,
collective consumer memory of distinctive brand
assets start to erode. Research by Millward Brown
has shown that brands going dark register declines
in at least one key brand metric.11 And even when
they start advertising again, these assets are less
effective than they were before because they’ve been
forgotten, at least in part or by some consumers.
WARC Evidence (2020), “What happens if I stop advertising”,
11
https://bit.ly/3btI0XQ
Advertising through a recession.
Sustained, long-term brand building advertising experiment played out over several years in the early
is one of the most effective ways that brands 2000s. Before this experiment began, a 10% price
can build and sustain a price premium over both increase for Gordon’s would routinely be accompanied
branded competitors that invest less and also over by a 15% reduction in sales volume. But by supporting
private-label products. A good definition of the price the brand with annual, seven-figure, brand-building
premium that supported brands enjoy as a result of advertising campaigns, Diageo reinforced Gordon’s
sustained brand building advertising is “consumers’ price premium. After three years, a 10% price
perception of the substitutability of brands”. That is increase would only reduce sales volume by 10%.
to say, the stronger the price premium reinforced by
powerful memory structures, the more willing they
are to tolerate price increases before the switch to
an alternative brand or private-label equivalent.
Diageo discovered the impact that going dark can
have on a brand’s ability to command and sustain a
price premium when the company chose to increase
its support for its flagship gin brand, Gordon’s, but
stop supporting its market-leading blended Scotch
whisky brand, Bell’s. This on-off, Gordon’s-Bells
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By contrast, “going dark” on Bell’s had a catastrophic Figure 8. The impact of sustaining vs cutting marketing spend on price premium effects
effect on its whisky brand’s ability to command a price
Gin 1.6 Whisky 8
premium. Before cutting investment, a 10% price
increase would be accompanied by a more dramatic 1.4 7
30% fall in sales. But after several years of zero
1.2 6
investment, Bells lost its market leadership to the
well-supported Famous Grouse brand. What’s more, 1.0 5

Price Elasticity

Price Elasticity
after the experiment – and it was an inadvertent
experiment – a 10% price increase would lead to a 0.8 4

54% fall in sales. Price elasticity had deteriorated for 0.6 3

Bell’s by 83%. This stark contrast is shown in Figure 8.
0.4 2

0.2 1

0 0
Gin Gin Whisky Whisky
Year 1 Year 3 Year 1 Year 3

Advertising through a recession. 13

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Getting the mix right
The other significant consideration
in the market as it stands today is
how to adapt media channel choices
to the current environment.
For industries with a mix of retail stores and
online sales, the channel focus should clearly shift
to the channels that favour driving online sales.
For companies with the luxury of having market
mix models conducted at the sales channel level,
you should refer to your mix model results. For
those that don’t, here are the likely headlines:
Advertising through a recession.
1. Maintain or increase spend on TV – it lends itself to 4. Shift online advertising to where the consumers
emotional brand advertising, and audiences have are, namely news and entertainment sites, though
increased by 15-30% or more during the lockdown, do keep context and brand safety in mind.
providing for increased value on a high ROI channel.
5. If people are buying less online, consider reducing
2. Reduce out-of-home – everyone is stuck at home your search budgets. Check your conversion rates,
and very few people are now looking at it. as people may be showing intent but not actually
following through and making purchases.
3. 
Print media has similar issues to out of
home, as consumers are largely getting
their news online or on the TV, so you should
likely reduce press investment, too.
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In summary:
recommendations for advertisers
The best way for brands to ensure long-term
growth is to maintain or grow ad spend. This
is particularly true during a recession.12
With fewer brands choosing to advertise during a
recession, media is generally cheaper and so it costs
less to increase share of voice relative to competitors
and so share of market.
During and after the 2020/21 coronavirus recession,
brands are likely to need to hold their nerve for longer
and dig deeper than in previous recessions. It will
be truly global, affecting all categories – some very
much more than others – but the benefits are likely
to be large.
Even during a recession, make sure you balance
investment between long-term brand building
(typically 60% of spend) and short-term sales
activation (40%).
12
Millward Brown (2018), “What happens when brands go dark?”, https://bit.ly/3bwZ7rJ
Advertising through a recession.
Those able to trade and sustain their presence should Cutting spend and going dark should also be
focus on brand rather than price and promotions. This avoided because they harm the ability of your brand
will lead to a shift in media strategy, with a pivot to retain its price premium and its price elasticity.
towards more broadcast TV and a reduction in digital Your customers will find it easier to substitute your
display and search. Though short-term price brand for a competitor or private-label product.
promotions activity is attractive because it can drive
top line revenue and income, promotions erode brand If you advertise through a recession with the right
equity measures. campaign, in the right places, it will likely prove to
be a profitable decision.
Consumers will spend less on big ticket items,
across most categories. Mobile operators, for example,
are likely to sell more SIM-only contracts and fewer
phones, so telcos should change both messaging
and a reduce spend on PPC, which is designed to
drive conversion.
If at all possible, avoid going dark. Although it may
take many months to feel the impact, it can take up
to five years to regain share of market having turned
off all ad spend.
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About the authors

Mike Campbell
Mike leads Ebiquity’s International Effectiveness practice, which
applies advanced analytics techniques in order to help brands
optimise marketing investments across key marketing activities
and markets. He is based in our London office. Prior to joining
Ebiquity, he spent 12 years as Managing Director of Ninah
Consulting’s London office and global head of its FMCG Centre
of Excellence, working with Nestlé, Diageo, and General Mills.

Christian Polman
Christian Polman is Chief Strategy Officer at Ebiquity,
leading innovation, M&A, partnerships, and all marketing and
communications activities. His background is in business strategy
and digital innovation, having held roles in C-suite advisory at
Bain & Company’s London and NYC offices, in digital strategy
at Digitas’ Boston headquarters, in Strategy & Operations
at Google London, and in various other consultancy roles.
Christian holds an MBA from Johnson at Cornell University.

Advertising through a recession. 16

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