Print

Mail

wiki links

For Madison Avenue, the recession is already here

"We don't profess to have any prophetic abilities to call the economy any better than the folks who do it for a living ... [rather] when gas prices spiked last spring, we saw the pressure this put on our core customers."

Stephen Quinn, Wal-Mart's chief marketing officer

Let the economists and politicians debate whether the US economy is in a recession. Madison Avenue is already battening down the hatches.

Since September, Wal-Mart Stores, the US' largest retailer, has built its entire current advertising approach upon this bald premise: "Save money. Live better."

Skeptics wondered at the time whether Wal-Mart and its new agency, the Martin Agency in Richmond, Virginia, part of the Interpublic Group of Cos, were fixating on price at the expense of other attractions like fashion or breadth of merchandise.

But the economic problems that followed -- falling prices for houses, tightening credit and the gyrations of the stock market -- vindicated their decision. Amid widespread consumer anxiety, Wal-Mart weathered a difficult holiday season for retailers, reporting a 2.7 percent increase for last month while many of its rivals, including Target, posted losses.

"We don't profess to have any prophetic abilities to call the economy any better than the folks who do it for a living," said Stephen Quinn, Wal-Mart's chief marketing officer.

Rather, "when gas prices spiked last spring, we saw the pressure this put on our core customers," he said.

Those customers can find plenty of companies following Wal-Mart's lead, with many campaigns speaking to Americans as if a recession were already under way.

But while many marketers may be looking to adjust the contents of their campaigns, forecasters believe overall advertising spending will remain strong as a recession looms.

TNS Media Intelligence in New York estimates that ad spending will increase by 4.2 percent (fueled in part by an estimated US$5 billion in spending connected to the Summer Olympics and the elections), a steep increase over a 1.7 percent increase a year earlier.

"A large chunk of the core ad economy is in a weakened condition," said Jon Swallen, senior vice president for research at TNS.

He cited retailers, especially "housing-related retail, from the big-box chains to the mom-and-pop home furnishings stores."

On the other hand, in "key categories like automotive," he said, "ad budgets have been going up as sales have been going down."

Here are some other campaigns suggesting that advertisers already believe the wolf is at the door:

TheLadders.com, a jobs Web site, sent e-mail messages last Monday bearing this subject line: "Recession is coming, get your job insurance now!"

Nissan is pitching the fuel economy of this year's Altima sedan, with commercials devoted to its ability to go more than 965km between fill-ups.

Starbucks is testing in Seattle-area stores "short," or small, coffees priced at US$1 a cup -- and free refills.

Those with long memories may recall other times in the last two decades that ads were devoted to encouraging consumer frugality rather than celebrating unchecked spending.

For example, there were price-conscious campaigns after the 1987 stock market crash, during the 1990-1991 recession and after the dot-com bubble burst in 2000-2001.

This time, however, it seems the shift in tone is taking place earlier in the economic cycle. After all, a recession is defined traditionally as two consecutive quarters of contraction -- and officially, there has not even been one.
This story has been viewed 2405 times.