Companies and brands that went with the flow of the boom-bust cycle by cutting ad spending — as data suggest household and personal-care players did last year — tended to lose more share to private labels both immediately and longer term. Companies whose ad spending didn’t vary according to economic cycles — based on an analysis of Ad Age data on global ad spending — also tended to increase their stock prices an average of 1.3 percentage points annually ahead of others from 1986 to 2006, said Mr. Steenkamp, who analyzed global results of 26 marketers across multiple industries.
“Marketing, we are happy to report, is not running scared from the economy by slashing budgets and headcount. Instead, marketing is getting back to our key function: driving business and opportunity to sales and owning the customer experience.”
Companies continued to reduce marketing budgets in the first quarter of 2009 but the rate of decline has slowed, according to the IPA‘s Bellwether survey. In the first quarter, the net balance of companies reporting an increase in budgets was -34%, which compares to the record low reading of -42% in the fourth quarter of last year.