It’s The Great Depression Charlie Brown!

Put on a happy face!  Not so easy when we see the government bailing out American industry, Wall Street making wild swings, jobs being cut, bottom lines being slashed, businesses closing their doors, and economic forecasts predicting nothing but steep declines well over the horizon. But hey! At least the election is behind us!

Watching traditional media trying to budget for the upcoming year is a lot like watching Charlie Brown make yet another run at the football – hoping he’ll be able to make contact before Lucy yanks it away. We all know the end result, but try telling Charlie that. Charlie could make adjustments (like having Pig-Pen or Linus hold the football), but instead – he changes nothing and relies on “hope” to produce a different result.

Recently, I read an article from Dave Chase at iMediaConnection.com
(link: http://www.imediaconnection.com/content/20821.asp) that has been rattling around my brain ever since. The story was about advertising during the Great Depression, and produced some very interesting insight.

When we think of the Great Depression, we think of an awful time of no money, no jobs, no business. However, the period of economic hardship was not void of business success stories – in fact, it produced some incredible “David & Goliath” storylines.

For example, going into the Great Depression CW Post was a top brand – coming out of the Great Depression, it was Kellogg on top.  Going into the Great Depression, Ford was outselling Chevy 10 to 1 – coming out, Chevy had taken the lead. How? Kellogg and Chevy launched aggressive marketing and advertising campaigns, while CW Post and Ford cut their advertising budgets.

What Kellogg and Chevy understood was that people had less money to spend, BUT they were still spending money. Sure, they were far more conservative and bargain-minded in their purchasing decisions, but they were spending money nonetheless. While Ford and CW Post made their bottom line look better and believed their brands were strong enough to survive without advertising; Kellogg and Chevy took advantage of the opportunity to become top of mind with consumers that were still making purchases.

Some other interesting notes – contrary to popular belief, a bad economy is not necessarily the worst time to launch a business. GE, Disney, HP, and Microsoft all launched their businesses during some of the worst US Economic downturns that had other businesses laying-off employees, cutting budgets, and shuttering their doors.

Cutting ad budgets during an economic downturn is perhaps the worst thing a business can do – a notion further supported by Robert Kiyosaki of “Rich Dad, Poor Dad” fame. His recent article for Entrepreneur Magazine highlights the same important lesson. (link: http://www.entrepreneur.com/magazine/entrepreneur/2008/november/198022.html)

Kiyosaki was speaking to a group of 500 business leaders and opened with: “I’ve got good news and bad news. The good news is that you’ll have fewer business competitors next year because many of your competitors will be out of business. The bad news is you might be one of those businesses.” He then went on to express how critical it is for businesses to keep promoting (advertising) during tough times if they hope to weather the storm.

Conveying this message is sometimes easier said than done. Many advertisers allow the fear and uncertainty about the economy to dictate their actions – and many view advertising as a luxury rather than a necessity. Therefore, it’s the first to go when slashing expense.

At Remerge, we’ve been working with our clients to understand the importance of integrating new media into their existing business model. Going forward, the web and mobile will be as much a part of legacy media’s offerings as 30’s and 60’s. Those that grasp this notion are seeing the benefits – they’ve been ringing-up new direct business in just the last 30-days. Those that view new media as a fad, or simply a new digital NTR tool – have spent the last 30-days slashing their new media budgets for ’09, because like the nervous advertiser, they view new media as a luxury rather than a necessity.

Investment banker Cowen and Co. looked at advertising during the last six US economic recessions and found that advertisers increased spending on direct marketing. As Dave Chase noted in his article, those advertising channels with the least ability to track ROI suffered the most.

New media has created a Mass vs. Me media scenario that will become evermore present in the rough and tumble economy ahead. Reaching 30,000 people (the mass audience) will not be as important or efficient for advertisers looking to keep their name in the mix, while simultaneously searching for value – the most bang for their advertising buck. Targeting 3,000 of the right people (the “me” audience) will be foremost in the advertisers mind.

For radio and other legacy media to attract new dollars – a jumpstart two-step plan must consist of a means of defining their “mass” audience into smaller, more well-defined “me” audiences - as well as creating the channels for reaching those targets. While those smaller audiences may not fetch as many dollars as traditional media is accustomed to making from their large general audience ad buys, they will be dollars none-the-less… and begin to lay the groundwork for the multi-channel future of radio that will be here before you know it.

This approach will also give traditional media some affordable, measurable media offerings to help them through trying economic times, while assisting advertisers who want to stay top of mind on a tight budget.

--Chuck Francis, VP New Media Strategies, Remerge. Remerge Media is a multi-media consulting firm, specializing in new media integration and simultaneous media solutions. Remerge works with radio (as well as other legacy media) clients to help them understand, integrate and generate revenue from new media through custom sales solutions, and providing traditional media sales personnel with highly specialized training. More information about Remerge can be found online at RemergeMedia.com