Is advertising in crisis?

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The question has a double answer. On the one hand, taken into account the current economic situation, we could say that advertising, as the rest of economic activities, is in the middle of a period of severe crisis. However, if the last data on advertising investments are analysed in detail, we can see that the situation of the advertising industry is much worse that what could be expected in this situation.

It is well known that advertising is a sector that overreacts to the economic cycle. When the economy grows, advertising expenses grow above the average. When recession is in place, the advertising sector suffers more strongly than the rest of industries.

The explanation is quite simple. When firms face bad times, one of the first expenses to be cut are those allocated to the advertising budget. This indicates that, in spite of the large importance given to communication in society, many companies consider that advertising is an expense and not an investment aimed to achieve better performance in the long term.

A good example of this behaviour is provided by the recent new on the cut in advertising made by Catalonian firm Freixenet regarding her Christmas campaign. http://www.abc.es/20091020/gente-tv-radio/freixenet-completo-200910192016.html

Post edited by Cristina Etayo.

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