In the early 1990s, the United States saw a recession that resulted in a loss of over 1.6 million jobs- peaking at an unemployment rate of 7.8%. Hoping to stay afloat and save money during the economic downturn, McDonalds, like many other brands, dropped their advertising budget. Seizing the opportunity, competing fast food brands Pizza Hut and Taco Bell strengthened theirs instead- resulting in sales increases of 61% and 40%, respectively. McDonald’s saw a resulting 28% decrease in sales.
During the “Great Recession” of the late 2010s, ad spend in the United States dropped by 13%. Amazon however, continued to innovate and grow market share with products like the Kindle that led to more eBook sales than printed books on Christmas Day 2009. By continuing to develop and promote new products during the slump, the company grabbed a stronghold in the minds of American consumers and grew sales by 28% that year.
Powerhouse brand Proctor and Gamble is likely the most influential example of how to succeed during rocky times, having weathered many ups and downs since their inception and being known for inventing many modern branding concepts. Their behavior during our most recent (and current) time of economic turmoil is no exception.
Compared to fixed costs associated with production, operations, and products, the often high spend on marketing and advertising strategies can seem like the natural place to cut back in times of financial turmoil. Brands that look to history when recession-proofing their budgets will however see the opposite is true- companies that maintain or grow their ad spend see greater increases in profit than companies who cut back. These brands flip financial setbacks into opportunities to outshine the competition and increase their market share and profits.