Research

James Swift

10 August 2021

Strategist’s Digest: What happens when you stop advertising? 

Contagious digests the most interesting and relevant research from the world of advertising and beyond, because there’s just too much to read and too little time

What happens when brands stop advertising? ​​​​​ 

By Adam Gelzinis, Rachel Kennedy, Virginia Beal, Nicole Hartnett and Byron Sharp at the Ehrenberg-Bass Institute for Marketing Science.

Give it to me in one sentence.

Former Leo Burnett adman Simon Broadbent was right – brands that don’t advertise are like planes with no engines.

Give me a little more detail.

Researchers monitored the sales and media spend of CPG brands in Australia over 20 years to see what happened when companies suspend all mass media advertising.

They found 57 instances of firms that ceased advertising for a year or more. Typically, when brands went dark, their sales declined steadily before tapering off. On average, sales fell 16% after one year of no advertising and 25% after two years.

Initially, there was a lot of variation in the results. After one or two years with no advertising, some brands were still reporting improved sales. But after four years of marketing silence, no company was in a better position than before the blackout.

How brands fared depended on their size, and also how well they were doing before they stopped advertising.

Small brands (those shifting fewer than 250,000 units per year) were quicker to suffer and more vulnerable to extreme declines.

According to the researchers, big brands (those selling more than 1 million units) are insulated by their greater physical and mental availability, and the data showed them to be mostly stable after a year or two without advertising.

Brands with stable sales were, on average, also able to hang on for two years before things started to go south.

Large brands that were increasing sales before they shut off their advertising were even able to maintain their upward trajectory for two years. (What happens after that is anyone’s guess, because no large and growing firm within the data set stayed dark for that long.)

But every single brand that was losing sales before pulling all its ad spend continued to decline. For already-shrinking brands, sales typically halved after just two years of promotional purdah.

The research also suggested that in many cases, brands that take a one-year advertising holiday will not recover right away and will need to advertise for several years before sales return to their pre-hiatus levels.

Why is this interesting?

Companies under pressure are quick to cut their advertising because the budget usually isn’t fixed and it’s an easy way to boost the bottom line.

Most of the research into marketing blackouts conducted so far has been limited to TV advertising and only measured short-term effects.

The Ehrenberg-Bass research looks at a wider set of conditions over a longer period.

Any weaknesses?

The authors of the study note that they were not able to control for many potential confounding variables, like changes to price and distribution.

Where can I find the whole report?

You can read the report for free here, or you can buy the academic paper here.

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