Why Advertisers Stop Buying Space

What would you do if you got laid off from your job today? You would do everything you could to conserve your cash so that you would have the money available to pay your bills. You would stop going out to eat; you would stop shopping for clothes and other items; you would cancel vacation plans; you would stop using your credit cards. You would do everything you could think of to hold on to your cash so you have as much of it as possible to meet your obligations until you found another job and your cash flow once again improved.

Businesses are no different. When an economic downturn reduces a company’s sales, most companies react in nearly the same way as if they, too, were “laid off.” They do everything they can to conserve cash so the company can survive until sales improve. They look for the most cash intensive expenses which can be reduced. In many cases, this translates into staff layoffs because that has the effect of nearly immediate major reductions in cash expenditures. They next look at other areas which can be reduced to conserve cash and one of the most obvious is to reduce or cancel advertising and marketing purchases. These companies will say that the reduction in their sales puts them in the position to have to reduce advertising expenses because they don’t have the money to pay for them. In the short term, this is true.

In the last downturn, I remember speaking to a major supplier of a product utilized throughout the industry. He cancelled his advertising and told me that he had a warehouse full of products that were not selling and until he could convert those goods to cash, he had no way to pay for any advertising. I, of course, told him that the best way to empty his warehouse was to advertise the products, but his response was that no amount of advertising was going to increase demand for a product that was not being utilized because of the financial health of the industry he served. But, what was he doing to assure that once the economy improved, his product would be the first ones purchased?

The answer to this question is the role that advertising plays today. For those selling advertising space, the pitch is no longer about utilizing advertising to sell products or services. It is about companies advertising to maintain brand awareness, increasing their visibility, and helping them retain market share when the cash flows once again. By rethinking your advertising sales strategy, you will be in the position to regain the ad dollars that have been lost and will be the publication of choice for industry suppliers when they once again have the financial ability to purchase advertising. So, don't stop selling. Sell harder by delivering a different message.

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