ADVERTISE!
There is no bad time to advertise

At the first sign of economic trouble, the first thing that executives slash is their advertising and marketing budgets. It is almost a knee-jerk reaction, mirroring the perception of most executives on the value of advertising, and, as with anything done hastily, is usually something they tend to regret later on.

“People who starve their brands now will be paying for it in the future,” warns Kevin Lane Keller, marketing professor at Dartmouth University’s Amos Tuck School of Business, as quoted by BusinessWeek. The article noted that in the last US downturn in the early 1990s, private-label products leaped to prominence because packaged-goods marketers slashed their advertising budgets.

Business journals are filled with stories about how companies who held back during hard times woke up to see their brands lagging behind because somebody else moved aggressively during that same period. In the U.S., Taco Bell and Pizza Hut grabbed market share from McDonald’s when the latter chose to act with conservatism in the early 1990s, while Taco Bell and Pizza Hut peppered the market with advertising.

Similarly, in the Philippines, Jollibee’s rise to market leadership could not have occurred had McDonald’s not chosen to hold back on its marketing during the turbulent mid-80s. McDonald’s woke up to see its market share at the hands of the Filipino giant who had no qualms about using advertising to put itself high in its market’s consciousness.

Today, of course, the fast food giant has learned its lessons and, despite the continuing uncertainty in the environment, continues to lean on advertising to protect and build on its market share. Aside from mainstream ads on television, radio, and print, McDonald stores are adorned with streamers, posters, placemats, and buntings to attract potential customers and to encourage them to return.

The Target
Smart companies know, however, that sustaining advertising spending is not enough. Rather, it is using advertising to reach out to the right target market and being able to offer them something of value that makes a company’s marketing campaign successful. In a special presentation last year to clients and media on “Advertising in a Recession,” AB Communications, Inc., a leading Filipino-owned advertising agency, pointed out that advertising - to be truly meaningful and useful - must take a closer look at what the Filipino consumer truly needs, in terms of products that will become part of her lifestyle and give them the best value.

During the presentation, AB Communications executives Tom C. Banguis Jr., Gil A. Ligad, and Pinky L. Abellada, stressed that advertising, especially in a recession, will have to answer this question asked by consumers: why is your product relevant to me, my needs, my self-esteem?

At the same time, the AB Comm presentation noted that, despite current difficulties, there will always be products and services that will remain in demand, including those in food, shelter and utilities, telecommunications, personal care, and educational needs.

owever, consumers will be more “practical” in their buying and consumption patterns, and, as part of their coping mechanism, will likely forego some items in favor of more important ones. Consumers could also use substitute brands or products in the face of a limited budget.

As it is, consumer confidence remains low. A recent survey by marketing research firm AC Nielsen noted that consumers do not exactly see recovery coming anytime soon. The latest ACNielsen survey on Consumer Confidence Trends in the Asia Pacific also showed that Filipinos echo the sentiments of other consumers in the region who also see a recovery in their respective economies and the global market only in the second semester of next year.

The survey, which was conducted last May, is the third installment of a semi-annual survey first done by ACNielsen in July last year. It covered 13 economies in the region, including the Philippines.
“The expectation [of a recovery] moved six months to either the third or fourth quarter of 2004. So, the expectation of recovery has been delayed,” Bienvenido C. Niles, Jr., ACNielsen managing director for Southeast Asia said during the presentation of the latest results.

Mr. Niles also noted that while respondents feel things will not improve in the near term, more consumers still believe that an economic rebound will eventually take place. “While respondents scaled down their expectations for 2003, there is now relatively greater optimism that recovery will occur within 12 months,” Mr. Niles said.

This should serve as a signal to manufacturers and marketing companies to step up on their campaigns. “Companies should continue to work on product development and advertising because the potential is high. Consumers believe a recovery is likely in six to 12 months, which is not too far,” he added. He noted that concerns about a long-term recession have kept consumers reluctant to spend, with most saving their money for fear of difficult time ahead.

But as consumers now see a possible turnaround in the economic situation, they are expected to start spending again.
Last year, Southeast Asian markets—Thailand, Indonesia, Singapore and the Philippines—posted moderate to strong double-digit growth rates due to positive economic growth and a surge in advertising spending in telecommunications, entertainment, and consumer hair care sectors.

In fact, there is a good reason to continue advertising even during periods of economic difficulty. In the Philippines, it has been shown that even during these periods, people continue to stock up on things that matter to them, such as personal care products.

Another ACNielsen research showed that in the first four months of 2001, or at the height of the country’s impeachment problems, consumers bought 15% more hair conditioners and seven percent more baby cologne—a product being increasingly adopted by teenagers. Deodorants saw a three percent growth in sales volume and 10 percent increase in value. More expensive high-end facial care products also helped maintain their total sales value despite a 15-percent drop in sales volume.

Filipinos are a resilient race who are not easily fazed by shrinking budgets and faltering economies. As such, companies should continue to reach out to them even when conventional wisdom says otherwise. Rationalizing advertising expenses does not always mean cutting this altogether. There are cheaper and nontraditional forms of advertising and promotional campaigns such as in-store promotions, billboards, signages, and the like which do the job just as well. One successful case is that of Johnson and Johnson’s pH 5.5 Body Wash. The creative media strategy called for an “excitement phase,” where “Refresh and Go” stations were put up in gas stations, hotels, and resorts that provided extreme heat and water conditions. The campaign, executed during the long holiday weekends, effectively exhibited the product’s benefits of a “soft, healthy skin.” Sales grew 35% over quota in less than one year, accompanied by a 93% awareness rating among consumers.

Of course, successful firms have long realized that there is no wisdom in holding back on advertising in bad times. Nielsen Media Research noted that multinational companies (MNCs) cornered the top three spots as last year’s biggest ad spenders. Procter and Gamble Philippines snatched the No. 1 spot from Unilever Philippines, which dropped to second place, while Nestlé Philippines kept its hold on the third spot.

After all, marketing is a continuing effort, and those who realize that the business of reaching out to one’s target market and continuously offering them something of value is not time-bound are those who are most valued by their clients.