With the recession forcing companies to rejigger their marketing budgets, mainstream media advertising must begin to support an ROI.The NY Times’ media blogger Virginia Heffernan weighs in on the industries that spend the biggest proportion of their revenue on advertising:
Spending the Greatest Percentage of Total Revenues on Advertising Over the Last 12 Months
| Industries | Advertising |
| 4483 – Jewelry, Luggage, and Leather Goods Stores | 3.75% |
| 4531 – Florists | 3.63% |
| 4421 – Furniture Stores | 3.55% |
| 5312 – Offices of Real Estate Agents and Brokers | 3.36% |
| 6115 – Technical and Trade Schools | 2.91% |
| 7222 – Limited-Service Eating Places | 2.88% |
| 4481 – Clothing Stores | 2.70% |
| 6116 – Other Schools and Instruction | 2.64% |
| 5223 – Activities Related to Credit Intermediation | 2.58% |
| 4511 – Sporting Goods, Hobby and Musical Instrument Stores | 2.47% |
| 4422 – Home Furnishings Stores | 2.36% |
| 8122 – Death Care Services | 2.35% |
| 7139 – Other Amusement and Recreation Industries | 2.34% |
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Two types of products/services seem to stand out:
- Big ticket retail – real estate (if you can call it retail), leather goods, furniture (I’m surprised cars aren’t on the list) – isn’t moving as much so it seems ad budgets remained fixed but revenues dropped.
- Business opportunities due to recession – credit services, trade schools, fast food – increased their ad budgets
Conclusions:
- Big ticket retail advertising was a defensive marketing expenditure – companies didn’t cut their ad budgets in anticipation of slow sales, and the ROI from the marginal cost of the ads were likely negligible.
- Recession based businesses were offensive marketing opportunities which benefit from advertising because their message – “save your credit”, “get a better job” – hit on consumer fears.
Advertising does work well when the one-way message is to the consumer is emotional and urgent. With the recession next year, we’ll monitor the trend towards leveraging the social media as a cost-saving marketing strategy.
Advertising generally does not work. Therein lies one of the biggest root casuses of our recession. General Motors and associated dealers have spent more money than any other company, only to slowly fail over the past 60 years. One of the problems is an almost universal disconnect between those that produce the advertising and those that sell the product. Distant deadlines, misprints, misplacement and misunderstandings are very common. Ads actually cheapen a product, and that may be why you don't see ad campaigns for Nordstrom's, but you do for discount retailers willing to pay a dollar a hollar. The effect is that it cheapens the media and therefore the value of the associated ads. And remember that no one ever dropped out of advertising school to become a doctor, but there are many that drop out of medical school and almost every other major to get into advertising. If advertising really works, then let's buy it all. Let's spend the entire stimulus plan on it. Unfortunately there is little or no way to accurately measure the value of advertising. The head of the Association of National Advertisers has stated that advertising has missed the boat.
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