The effect of stopping with advertising

Long-Term Impact on Brand Health

Les Binet, the Head of Effectiveness at adam&eveDDB, recently spotlighted a vital topic that resonates with every marketer: the long-term impact of pausing advertising, especially during economic downturns.

Brands that stop advertising for a year lose an average of 10% in market share, escalating to 20% after two years, and a staggering 28% after three years.

A significant body of research, including a recent study published in the Journal of Advertising Research, underscores a startling truth: halting advertising can lead to substantial and lasting harm to brand recognition and market share. This study, conducted by researchers from the University of South Australia, updates earlier findings with a focus on the consequences for brands that stop advertising for a year or more. The study analyzed 22 different American consumer products over 2010-2015, focusing on various categories, sizes, and purchase frequencies.

Brands that cease advertising for a year lose an average of 10% in market share, escalating to 20% after two years, and a staggering 28% after three years. This research enhances our understanding and lends credibility to prior evidence about the progressive decay of brand value in the absence of advertising.

The rate of decline varies based on brand size and market share trends before the advertising pause, as well as the industry sector. Consumer products purchased less frequently exhibit a greater decline in market share following a three-year advertising hiatus. Mel Edwards, the Global CEO of Wunderman Thompson, warns, “Going dark makes brands vulnerable, and people may trade your brand for something else.” Despite this widespread understanding, brands often choose to pause advertising for various reasons, such as increasing profits, averting hostile takeovers, or strategic portfolio decisions.

A shrinking customer base and diminishing average customer loyalty pose long-term dangers, especially as most revenue comes from occasional buyers. Brands aiming for stable or growing market share need to plan for continuous advertising investment. Larger brands with a growing or stable market share can better withstand a period of non-advertising than smaller brands or those already experiencing a decline in market share.

In conclusion, this research is a wake-up call for advertisers. It emphasizes the critical importance of maintaining a consistent advertising presence, particularly during challenging economic times, to safeguard long-term brand health and market share.

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 Source: https://www.journalofadvertisingresearch.com/content/63/2/172?s=03

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