How brands thrived during the Great Depression

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With the recent meltdown on Wall Street and talk of a possible depression, I thought it would be instructive to do a bit of research on what happened with regard to advertising during the Great Depression. I have heard anecdotes over the years of great companies founded during recessions. What do GE, Disney, HP and Microsoft have in common? They were all startups during steep declines in the U.S. economy. GE started during the panic of 1873, Disney started during the recession of 1923-24, HP began during the Great Depression, and Bill Gates and Paul Allen founded Microsoft during the recession of 1975.

Little did I know that one of the best sources of information on this topic was written by an archaeologist and Egyptologist named Rod Polasky, who now runs an archaeology website -- archaeolink.com -- designed as a homework help site. To my surprise, this archaeologist covered the impact on advertising and the accompanying rise and fall of businesses during the Great Depression. As he noted, smart companies prospered during and coming out of the Depression.

To begin, not all was doom and gloom during the Great Depression. It was a time when those who knew what they were doing made great economic strides, and the very nature of the Depression was an economic boon for them. It was a time when several companies benefited from aggressive marketing while their rivals cut back. A good example of that would be Kellogg besting C.W. Post during that time. Consumers didn't stop spending during the Depression; most just looked for better deals, and the companies providing those better deals came out stronger after the Depression ended. When spending picked up, consumer loyalty to those companies remained.

Generally speaking, those companies that not only survived but also thrived during the Great Depression were those that continued to act as though there were nothing wrong and that the public had money to spend. In other words, they advertised. These are industries that didn't wait for public demand for their products to rise. They created that demand even during the most difficult of times.

Because so many companies cut spending during the Great Depression era, advertising budgets were largely eliminated in many industries. Not only did spending decline, but some companies actually dropped out of public sight because of short-sighted decisions made about spending money to keep a high profile. Advertising cutbacks caused many customers to feel abandoned. They associated the brands that cut back on advertising with a lack of staying power. This not only drove customers to more aggressive competitors, but it also caused financial mistrust when it came to making additional investments in the no-longer-visible companies.

Both anecdotal and empirical evidence support the case that advertising was the main factor in the growth or downfall of companies during the Great Depression. To put it bluntly, the companies that demonstrated the most growth and that rang up the most sales were those that advertised heavily. Brand marketers can take a page from history to see which purchases were most affected. No doubt, smart publishers and technology suppliers will adjust their account targeting based upon which industries suffer the least. Perhaps more importantly, they should assess which companies will be the Kelloggs or C.W. Posts of this era so that sales resources are properly focused.


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Comments

Chris Adams
Chris Adams January 4, 2011 at 3:51 PM

Nice article. however, you should cite your sources:

http://answers.google.com/answers/threadview?id=178334

Joseph Reiner
Joseph Reiner October 31, 2009 at 4:00 PM

Just what I was looking for and what I have been preaching to businesses that are short sighted and short minded.
Thank you for this incredible information and if you you would or could recommend other sights I may find similar information I would really appreciate it.

Best to your companny!