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When the Boom Economy Fades®€ƒ

What do you do? Advertise – of course!


When the Boom Economy Fades®ƒ

What do you do? Advertise – of course!


Wall Street forecasters predict slower growth through the early part of this year. So historically what do companies large and small usually do in uncertain times? Pull back on spending, of course. And what’s one of their first spending cuts? Advertising, of course.

Now let’s go back to the opening line of this column. When the boom economy fades, what do you do? Advertise! Let’s keep that thought in mind. One of the key points for dealers to remember is that advertising and marketing pay off much larger dividends in bad times than in good.

Smart marketers invest in brand building, touting either a company or specific product line, regardless of the economic times. Savvy brand-oriented marketers spend years telling consumers that their brand is important, relevant to their lives and lifestyles. Some succeed, and some fail. But not for the lack of effort. And "brand" is more than a product, it’s your company, your image, your place in your local market.


No doubt this brand emphasis comes easy to dealers in good times. But brand values also hold true in tougher times. Brand equity – the sum of your brand building effort – helps keep your product (company) from being just another commodity bought only on price. And it places your company in a "top of mind" position with customers when it comes time for them to buy.

There’s no doubt that when the economy contracts, dealer budgets need to be tightened. But advertising appropriations shouldn’t get the automatic axe. Why? For a number of reasons:

  • Advertising shouldn’t be looked upon as an expense. It’s an integral part of your dealership’s overall marketing mix.
  • Study after study says companies – large and small – that maintain advertising during the down times do better in sales and profits in later years.
  • The cost of sales is expensive enough, which makes it imperative to maximize the use of advertising.
  • With many tire dealers, advertising is one of the few ways you have to communicate with your customers. Especially when there is a timing mechanism attached to some of the products you sell – winter tires, pre-vacation vehicle service, custom wheels.
  • Fact: Overall selling costs are lower for companies that assign advertising a larger role in marketing their products.
  • Memories are short. Buyer turnover is continuous, especially for non-repetitious purchases like tires, refrigerators and TVs. All the more reason why your advertising should be continuous.
  • Economic analysts are much like weathermen – most down periods turn out to be shorter than expected.
  • It would be nice to think that every potential customer reads, sees or hears your entire ad. They don’t. Advertising works cumulatively, which means having continuity in your communications efforts to your market.
  • Advertising allows you to differentiate your dealership in a market full of clones, no-names and big-boxers.
  • The economic situation is the same for everyone – you and your competition. What better time to keep the advertising heat on than when competition pulls back?

Numerous business studies present formidable evidence that cuts in advertising during economic slowdowns historically result in both immediate and long-term negative effects on sales and profits.


Moreover, these studies have repeatedly shown that maintaining or increasing advertising levels during down economic periods may, in fact, be necessary to protect a market position against forward-thinking competitors.

When there is a slow down, it’s time to make sure you maintain – even increase – your advertising expenditures. When tire buyers need to be coaxed, advertising matters most.

As the cost/price squeeze gets really tough, it’s an understandable temptation to regard your co-op budgets and your own ad dollars as costs ®ƒ and then cut them.

This isn’t just a "small company" or "large company" issue. This is an every company issue. Times like we’re all experiencing right now is when we’ll see who believes in the value of marketing. And who doesn’t.


I hope you’re a believer.

Let’s hope your competition isn’t.

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