Seven.One: Advertising must become more effective during economic downturns
Seven.One Entertainment Group's head of research, Guido Modenbach, emphasizes the need for advertising to be more effective, especially during uncertain economic times. He advises companies to maintain their advertising investments.
Guido Modenbach, EVP Research, Analytics & Consulting at Seven.One Entertainment Group, stresses that advertising needs to become more effective, particularly during economically uncertain times. He advises companies to maintain their advertising investments even when facing difficulties.
Modenbach suggests that the caution shown by advertisers at the beginning of 2023 was a reaction to the uncertainty experienced last fall regarding the economic outlook for the year. Despite falling inflation and decreasing energy prices, this cautious approach persists. However, he anticipates that positive economic forecasts will translate into increased advertising spending in the second half of the year.
"Advertising must become more effective," Modenbach stated in an interview. He explains that companies should not cease advertising during economic hardship unless facing existential threats. Research, such as studies by GfK and Serviceplan, indicates that brands maintaining their advertising during crises gained market share, while those reducing it lost ground. An analysis by the Ehrenberg-Bass Institute supports this, showing significant sales declines for brands that halted their advertising activities.
According to Modenbach, brands that stop advertising risk losing relevance in consumers' minds. This diminishes their competitive position and reduces the likelihood of purchase. He warns against the mistake of abandoning consistent advertising in favor of short-term activation, such as increased promotions or performance marketing.
Research from Seven.One Entertainment Group shows that brands that move away from TV advertising can erode significantly. An example from the frozen food market illustrates this, where one brand lost 30 percent of its buyers after ceasing TV advertising. Modenbach's key takeaway is "don't go dark," a principle that helps companies maintain and grow their market share and mental availability, even during an economic downturn.