Research by the Ehrenberg-Bass Institute, as covered by Marketing Week, clearly shows the positive link between advertising and sales for a business. In summary, the research stated the companies which stop advertising lose sales.
The research looked at the media spend and volume sales of 70 consumer goods brands for more than two decades, and found that, on average, brands saw their sales fall 16% after one year without advertising. After two years without advertising, their sales fell by 25%.
Making matters worse for companies which do not advertise is the fact that not only does their sales drop, the decline cannot be easily fixed.
“The sales of a brand are like the height at which an airplane flies. Advertising spend is like its engines: while the engines are running, everything is fine, but, when the engines stop, the descent eventually starts,” stated the introduction of the research report.
Covid-19
The report comes off the back of many companies cutting advertising spend during the COVID-19 pandemic.
Marketing Week stated that the decision by companies to cut advertising spend during the pandemic saw their sales negatively affected. Conversely, companies which continued to advertise during the pandemic, or increase their advertising spend, reaped large benefits. It cited P&G as an example, with the company continuing to advertise during the “tough times”. The result was a strong sales performance, while other companies faltered.
On the matter of promoting their brand, P&G’s COO Jon Moeller was quoted as saying: “The best response to what we are challenged with today is to push forward, not to pull back.”
