Big spenders to reap slump gains

Companies with the resources and foresight to act boldly during the regional economic turmoil stand to reap significant benefits at the expense of less astute competitors, according to an advertising agency study.

The DMB&B study, titled Advertising in Times of Economic Difficulty, shows that multinationals have a distinct advantage during downturns.

Advertising is difficult for most companies in the present economic environment, but multinationals are protected by profits from outside the region.

The study said multinationals could take advantage of opportunities such as reduced competitive advertising, lower rates, and increased television and radio consumption.

DMB&B vice-chairman Sam Hill said 12 key studies of advertising in recessions during the past 71 years all indicated companies which spent big during downturns received significant results in market share.

He pointed to examples such as Budweiser beer, which advertised during prohibition in the United States and became the market leader in the country for the next 50 years. Kelloggs advertised during the US Depression of the 1920s and 1930s and had similar results.

'I believe the share battles of the next 30 years are probably going to be fought in Asia over the next three years. People who establish those advantages over the next three years are going to play off those advantages for the next three decades,' Mr Hill said.

'What happens is everybody stops [advertising] and the message tends to cut right through. Mobil [Oil] has talked about how it plans to increase its marketing budget [by 30 per cent] in Thailand while McDonald's plans to open 2,000 restaurants in Asia in the next three years and spend US$1.5 billion. This will pay off in the long term.' The study showed products such as televisions, cake mixes, over-the-counter drugs, affordable luxury goods, cigarettes and alcohol tended to sell well during recessions.

Products which suffered were real estate, cars, appliances and travel.