Wednesday, November 12, 2008

You advertise you get revenue

"Advertising is one of the first things that get cut, and its almost always a mistake, because you advertise to get revenue." This is what Eric Smidt CEO of Google said recently when asked about the current economic meltdown and its impact on Google and its advertising streams. We all know when tough times come the first thing companies look for are the soft lines on their budget sheets, marketing and HR (training etc) where they slash and burn. However they should think again before they get their choppers out. There’s a good deal of empirical evidence that recessionary times are one of the best times to be advertising. I was just looking at the latest Adex figures. While not 100% accurate they provide the best benchmark on spend in SA and there's some revealing trends. For one there has been no real growth in advertising and if you consider most media increase rates year on year then we are now in negative territory in terms of volume based advertising growth. For the past quarter advertising has remained static. Digital advertising is hopelessly under-read because Search is excluded and even with this, the category grew by 51% This is completely counter trend. I have little doubt that this area of media is growing at a much more aggressive rate than being reflected and its an ideal medium for recessionary times as it is measurable and flexible and generates leads – the lifeblood of sales.. What struck me in looking at SA’s top spenders is that the likes of Unilever and Vodacom who are market leaders have not headed for the hills or cut back on advertising. They remain steady and focused and no doubt this is paying off for them. Just like Warren Buffet’s view that now is the best time to be investing in the market, you could say now is the best time to be advertising and growing share of voice!