To Thrive, Invest More Now - Not Less

In today's workshop, the topic of the recession came up, and I learned about a research project that demonstrated that companies that advertise more heavily in a recession come out ahead afterwords - sometimes dramatically so.

McGraw-Hill Research did the study about the 1981-82 recession - the most severe we had had after the Great Depression. This study is widely available online - I chose this quote from a commentary in Arkansas Business because the author nicely summarized the findings:

McGraw-Hill Research studied the marketing spending of 600 U.S. companies during 1980-85. After the 1987 numbers were available, McGraw-Hill concluded that the companies that maintained or increased their advertising during the 1981-82 recession showed an average sales gain of 275 percent during the subsequent five-year period. Those companies that cut advertising during 1981-82 grew sales by an average of only 19 percent during the same period.

This study only looked at advertising dollars - the most short-term component of marketing. But it makes sense that if this is true for advertising, it would be true in spades for long term investments in marketing and product development.

As far as I know, no one's researched the impact of R & D investment, but I"m going to do some poking around to see if I can find one.