What Happens When Brands Go Dark

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What happens if I pause or stop my ad spending due to extraordinary times?


In an uncertain world where financial instability is ever-present and looming overhead for brands, marketers need to create strategic plans that involve adjusting, decreasing, or even cutting ad spend. Of course, "going dark" isn't always possible, nor typically a feasible choice. 

Giant Spoon, a creative media agency based in New York and Los Angeles, shared recommendations that companies can utilize during a recession "to achieve a greater 'share of voice' at a time where many brands are cutting cost on advertising and promotion" at an ANA event.

According to the recap of Giant Spoon's talk, share of voice is "the share of advertising a company has compared to its competitors. Companies that chose to advertise during a recession accrue a higher share of voice, thus generating more brand awareness than competitors." Thus, going dark is costly, and will cause greater repurcussions in the long run.

For instance, Giant Spoon reported that "companies that maintained their investment in marketing gained nearly 1 percent of market share. Those that increased their ad spend during the 2008 recession increased market share by 1.7 percent." Moreover, companies that reduced their ad spend during the 2008 recession saw a huge loss, as these companies "took three-to-five years to return to pre-recession productivity after going dark or reducing spending by 50 percent."

Adam Wiese, VP of strategy at Giant Spoon, recommended understanding your customer and meeting them where they are, stating:

"As an agency partner, we have to think about where we can start to invest. A brand may need to reduce media spend, but do we move that to research or to scenario planning? Planning and strategizing are going to be more important than ever. 

A lot of companies have moved to streaming services, along with digital and social channels. We need to understand where all of our customers are so we can put media in those specific places. We're starting to think about how we can shift our physical experiences to digital."

The following resources provide insight on how marketers can plan their ad spend strategies during extraordinary times. Also check out Marketing Planning Amid Uncertainty


Resources

  • What Happens When Brands Stop Advertising? Journal of Advertising, June 2021.
    Because of various financial reasons, or a change in strategic focus, sometimes brands
    stop broad-reach media advertising for a year or longer. This study addresses this omission by documenting the sales performance of 41 beer, cider, and spirit brands that advertised intermittently over almost two decades. Changes in aggregate brand sales are reported for the years when brands stopped advertising relative to the last advertised year. On average, brand sales declined immediately in the first year and every subsequent year of advertising cessation. Decline generally was faster for smaller brands and for brands that already were declining in sales before advertising cessation. The key findings of this study:
    • When brands stop advertising for a year or more, sales often decline year-on-year following the stop (on average, sales fell 16 percent after one year, and 25 percent after two years).
    • The rate of decline is fastest for brands that are already declining before the ad stop.
    • Small brands typically suffer greater declines than bigger brands.
    • Bigger growing brands tend to continue to grow after advertising stops for one to two years, whereas the sales trend quickly reverses for small growing brands.
  • Brand Building in a Recession. ANA, May 2020.
    The knee-jerk reaction for many brands during a recession is to cut advertising spending. However, history tells us that companies that continue investing during an economic crisis recover faster and increase the long-term value of their brands. Ultimately, maintaining healthy ad spend during a recession can present long-term opportunities for brands to increase market share, profits, and overall growth. Giant Spoon, a creative media agency based in New York and Los Angeles, described the many ways companies can leverage a downturned economy to achieve a greater "share of voice" at a time where many brands are cutting cost on advertising and promotion.

  • Advertising Through a Recession. Ebiquity, April 2020.
    While it is in theory attractive to turn off marketing investment during extraordinary times, historical precedent suggests that brands that thrive during and after a recession are those that sustain and even increase marketing spend. "Going dark" and focusing on short-term price promotions are in fact counter-productive strategies. They erode brand equity measures, stifle growth, and put brands at competitive disadvantage. They also make it incredibly challenging to retain price premiums that brands take years of long-term brand building investment to secure. This report covers:
    • What we can learn from history
    • The perils of shifting spend into short-term promotions
    • The impact of "going dark" on retaining brand price premiums
    • Recommendations for advertisers
  • The Impact of Going Dark in Advertising. Dentsu, March 2020.
    It's a perennial debate during troubled times. Do you go dark? Do you focus purely on response? What are the long-term effects of media silence on brands? The standard response from the industry is that all brands should keep spending. Chris Ashworth, head of strategy at Dentsu Aegis Network North, explored the implications of pausing activity during times of uncertainty.

  • When Brands Go Dark. The Advertising Research Foundation (ARF), Winter 2018.
    The decision to scale back or eliminate the advertising budget is never easy for marketers. The decision to "go dark" can have various causes, from a broad economic recession to narrower industry or company-specific revenue or growth challenges. Whatever the cause, "going dark" has both short- and long-term implications. Some of the findings:
    • Most empirical findings on the impact of "going dark" reflect marketing choices taken during recessionary periods, but insights are also relevant when industry and company-specific factors drive darkness.
    • Businesses that maintain or increase their ad spending may gain a lasting advantage over their competitors who decrease their ad expenditures during the same period, as reduced advertising by competitors provides a media environment with less ad clutter and potential lower media costs.
    • It is more challenging and costly to regain market share and brand equity once lost by "going dark" than it is to maintain them with even modest investment.
    • Emphasizing short-term sales, often through promotions, to satisfy profit targets can have negative brand equity repercussions and it is vital for marketers to regard advertising as an investment rather than a cost.
  • The Value of Long-Term Marketing. ANA, October 2021.
    Long-term marketing builds brand awareness and customer loyalty; when combined with short-term marketing, a brand can significantly increase preference, conversion, and purchase. The resources compiled here provide examples of how brands are successfully marketing for the long-term.

The Marketing Knowledge Center actively connects ANA members to the resources they need to be successful. You can visit the ANA website to engage with the MKC in three ways.

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Source

"What Happens When Brands Go Dark." ANA, 2022.