“Unpredictable” this is is the word that may do justice to the current situation prevailing around us. So, in this grim situation it would be naïve to talk about increasing a company’s expenditure but what if that is the best solution we have to resurface from this deep dip of the economic whirlpool? Don’t be shocked because by the end of our conversation you are going to say ‘de acuerdo’. To get the full juice out of this informative piece we need to go back a bit into the economic history of the world. Don’t worry I am not taking you again to the ages where man was food and animals ruled this planet. I am going to discuss an economic event that is so much erased from our memories that it has adopted its name from this negligence. Voila, you got it, I am talking about the Forgotten Depression of 1920-21. What? You haven’t heard about it? Relax, most of us haven’t heard about it because it was overshadowed by the Great Depression of 1929-30.

You might wonder that on one hand I said I’ll talk about economic history and on the other hand I am neglecting it. The most important lesson in economic history, that changed the way of doing business and the state’s control over the market. Don’t worry you won’t be disappointed by my negligence. So without any further ado, I am now going to discuss the event of the day.

Advertisement: Company’s Asset or Liability in Pandemic?
Analysis of impact of COVID-19 pandemic on advertisement expenditure of companies

Forgotten Depression:

The financial horizon was looking bleak during 1920 as unemployment had jumped from 4 percent to approximately 12 percent, and GNP tumbled down to 17 percent. Everyone was anxious about how to deal with it. While Japan tried to repair this year and ended up in seven-year jeopardy the United States dealt with it by reducing the expenditures and slashing the tax rates. The experience of 1920–1921 re-established the idea of free-market economists that government intervention is an obstacle posed to economic recovery. The forgotten depression proved that in spite of the absence of fiscal and monetary stimulus the economy can recover from the 1920–1921 depression. In fact, it was the avoidance of those tactics that recovery came.

Analysis of impact of COVID-19 pandemic on advertisement expenditure of companies

But we are not interested in it. We are interested in Mr. Roland Vaile, a young Harvard Masters student who carried out an interesting study in that time of peril. While everyone was wandering around and studying the conventional ways to tackle the depression, Vaile spent a year following the riches of 250 firms through the recession and into the growth period that commenced. Analyzing both advertising investment and annual revenues, Vaile divided the firms into three groups:

  • Firms that did not believe in advertising
  • Firms that cut back advertising during the Depression
  • Firms that increased it

And to our surprise, he found out that the companies that cut back the advertisement budget suffered even more than those firms that didn’t believe in advertising. As of the firms that increased the ad-budget, they not only survived the depression with ease but also were front runners in the recovery process. They gained higher profits and sailed on the high tides in the market.

So what we may learn from the forgotten depression is that the ad-budgets need to at least be kept at the level of pre-COVID times if not increased. Vaile’s study has proved that in a dire situation like the current scenario, as it becomes difficult for the brands to reach out to their potential clients in a conventional way, it is mandatory that the strategy be changed and reach out to the customers through feasible advertising solutions like Social Media, personalized approaches and clear messages. It must be noted that cutting the ad-budget would do more harm than good and no one is going to tell you this as it is risky for Ad-firms to tell the clients to share their meagre profit in these challenging times. But ColourSquare is more concerned about your benefit than its own risks. We are the Advertising Company with a different approach towards advertising and client relations. ColourSquare works with a motive to sacrifice every personal advantage for the client’s sake. Contact us today and avail our Brand Analysis absolutely Free of cost.

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