5 Reasons Companies Should Increase Ad Budgets


(By Todd Kalman) Ah, 2020 – the year that we’d all like to put in our rear-view mirrors as quickly as we can. At the risk of stating the obvious, the global coronavirus pandemic has been disruptive and destructive for businesses in virtually every market segment (with a few notable exceptions, such as PPE manufacturers). The pandemic is far from abating; in fact, it’s accelerating as we head into the winter months, and we may be well into 2021 before an effective vaccine is widely available.

Against this gloomy scenario, it is understandable that businesses of all sizes are cutting back on non-essential expenses as they try to stay afloat. All too often, advertising is one of the first budgets to get the axe – but we’re here to say: that’s a mistake. Risky as it might seem, businesses cannot afford to NOT advertise; in fact, it’s never been more important for advertisers to stay relevant and maintain high visibility with their customers.

Here are our reasons, in no particular order, why brands simply can’t afford to pull back on advertising now, nor in any time of crisis.

Reason #1: Advertising is Key to Survival
William Wrigley Jr. (yes, the gum magnate) was a man who believed strongly in the power of advertising. His famous motto “Tell ’em quick and tell ’em often” is a tenet for the ad industry even to this day. During the Bank Panic of 1907, a financial crisis rivaled only by the Great Depression, when most of his competitors were cutting their ad budgets, Wrigley did the opposite. He mortgaged everything to launch a massive advertising campaign that pushed the company into national prominence, and over the following decade the words “Wrigley” and “gum” became synonymous.

Here’s another famous Wrigley quote: “I market for the same reason a pilot keeps his engines running once he is off the ground.” Point being: Without engines, that plane will keep losing altitude and eventually crash. The same is true with advertising – it needs to keep going to stay effective.

The economic crisis created by the current pandemic seems unprecedented, but we’ve been here before. There’s strong evidence from past economic downturns that advertising is a vital weapon for survival. Local businesses that maintain or increase their presence during hard times are the ones that survive, but competitors who cut or eliminate their marketing budgets fall off consumers’ radar and often never catch back up.

Reason #2: Winter is Coming
Let’s be honest – the winter months are traditionally not great for radio broadcasters, and the first quarter of each year is often the slowest. Even in the best of times, people stay home and hibernate, and that’s compounded this year by the pandemic. But the silver lining is that buyers are spending more time in front of a computer screen than ever before, and they’re doing a LOT of internet shopping. It’s a golden opportunity for advertisers to stay top-of-mind with their target buyers. And it’s a prime opportunity for radio stations to introduce digital tactics that will help their advertisers do exactly that.

Reason #3: There’s Still Plenty of Buying Power
This pandemic has exacted a terrible toll on our society: lost loved ones, lost businesses, lost livelihoods. The last thing we want to do is discount that suffering, and let’s hope 2021 brings about a lasting period of healing and recovery.

But for advertisers, there’s another unexpected opportunity. Among the ranks of people who are still employed, many are finding themselves with a bigger-than-normal reserve of discretionary cash. They’re not traveling, eating out, or going out to brick-and-mortar stores to shop. In fear of contagion, many are cutting back on in-home services like house cleaning.

As we all know, the U.S. is a nation of consumers. People love to spend, and with the holidays coming up, many have more gift-buying wherewithal than they expected. By staying in front of consumers, advertisers have an opportunity to boost holiday sales – but they can also plant the seed for sunnier days to come. Here’s an example: In cold northern states, you might not think the dead of winter is a good time to offer discounts on bicycles or camping gear, but if the deals are attractive enough, people will buy them knowing that spring is just around the corner. By playing the long game, advertisers will be able to maximize these types of buying behaviors.

Reason #4: Strong Brands Win
Consider the typical internet buying process for, say, a computer monitor. The first thing most consumers might do is a google search for a monitor with the required specifications and features. The search is likely to turn up dozens of deals, from name brand companies offering solid guarantees to smaller, off-brand companies offering deeply discounted prices. But here’s the thing: people are more likely to buy the more expensive product from the name brand, especially for a piece of electronic equipment like a monitor. Why is that? Because the brand has done its marketing due diligence by staying in front of consumers and building a position of trust. Buyers know they can count on this company to stand behind its products and offer greater quality. But the off brand, the one they’ve never heard of? Not so much.

Reason #5: People Really Want to Buy Local
For many consumers, it might be the course of least resistance to buy from the large, monolithic online retailers. But when it comes down to it, a big percentage of buyers would much rather support their local merchants. Therefore, it’s more important than ever that local businesses maintain visibility and keep advertising, particularly online.

That’s where radio has the upper hand. Because radio stations have their fingers on the pulse of their listening audience, they are well-positioned to help local advertisers not only survive the pandemic, but also continue to flourish long after. By augmenting their traditional broadcast advertising opportunities with a healthy mix of digital advertising inventory, radio stations can offer better value and more reach than any agency can provide – and they can keep consumers engaged online until in-person shopping can make a safe comeback.

After all, the large monolithic online retailer (we all know who we’re talking about here) never sponsored a local kids’ sports team, or donated to a local hospital, or did a fundraiser for the local fire department. But the local mattress store or bike shop did – and radio stations can help these businesses maintain that vital link with their buyers through carefully considered digital tactics and thoughtful creative.

The Upshot
Even though it might seem counterintuitive and risky, the companies that up their advertising game now are the ones that will prevail in the long term. Consumers listen to the outlets they trust most, and radio remains at the very top of their list. With that in mind, it is easy to see why radio stations are so uniquely situated to help their local advertisers survive – and thrive – through the current pandemic and beyond.

Todd Kalman is the Senior Vice President of Sales, Marketron, (800) 476-7226.


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