While the current recession has hit advertising agencies and mass media outlets hard, the forecast is for mass advertising, such as TV, radio, magazines, and newspapers, to continue to lose its share of overall advertising budgets.

TV is losing viewers, radio is losing listeners, and magazines and newspapers are losing readers. What’s driving this trend is that consumers are trending more towards digital media driven by online content – typified by YouTube, Facebook, online gaming, as well as more and more homes having access to broadband internet connectivity  and its capability to provide an ever-growing and an ever-higher quality of video content.

Another factor that is driving this change is that online advertising tends to be more efficient and more measurable. It’s predicted by Pricewaterhouse Coopers that by 2013, online advertising will grow to 20% of total advertising revenue, up from its current 13%.

Public Relations, aka PR, is great, because it gives the consumer a sense of an impartial third-party endorsement. It’s almost like the media outlet is saying:

“This company is good because we have analyzed it. We like the product/service they provide. Their core values are great. We think you should give them a try.”

And, simply by virtue of this unspoken endorsement, the PR coverage makes people want to buy/try/invest in their product or service. People want to be part of “it” – whatever “it” is.

This kind of PR coverage, if done well, can sometimes lead to a brand acquiring a cult status, especially among sophisticated buyers who don’t want to buy what everyone else buys. They don’t shop Wal-Mart or K-Mart. They’re “elites” and are looking for a unique brand experience – and they WANT to pay more for it because they want their experience to be different from a common, everyday experience.

Which is why, if a company is getting a lot of good PR, and developing a core group of devoted followers, one tactic they should employ is to pull back on their advertising, or stop it all together. A brand can be thought of a too “mainstream” if they advertising becomes too ubiquitous. Brands that have a cache can profitably stay off the mainstream “radar” by enjoying the loyal following of those who relish being part of a unknown, undiscovered brand.

In many cases, upscale brands can significantly damage their cache if their advertising appears too frequently or in too many media outlets. IZOD Lacoste polo shirts is an excellent example. A brand popular with the golf and tennis set in the 1980s, it became “mainstream” wildly popular in a few years. But, because of the brand’s overexposure in its advertising and its own popularity, it quickly lost its cache and sales dropped dramatically.

However, because everything old becomes new again, a new audience is rediscovering the brand. This time Lacoste is keeping the price point upwards of $100, which maintains it aspirational brand status and Lacoste is choosing to market the brand virally and eschew any mass advertising.

Recently, I read an article that appeared in the New Yorker Magazine. It discussed how two well-known cereal companies, Kellogg’s and Post, dealt with the economic depression in the late 1920s. At the time, ready-to-eat cereals were relatively new and Americans didn’t view them as a real alternative to oatmeal or cream of wheat.

When the Depression hit, Post did what most companies do, reined in expenses, cut back on research and development and cut its advertising budget. But Kellogg’s did the opposite, it doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies. Even when the economy cratered in the early 1930s, Kellogg’s profits rose 30% and used that momentum to go on and become the industry’s dominant cereal company.

Research has shown time and time again that companies that continue to spend on acquisition, advertising, and research and development during economic downturns do significantly better when the economy turns around.

You can read more about Kellogg’s in my book: “Branding Insights for Small Business” available on Amazon.com.

To read the complete article, click here. Special thanks to Gary Carr, an excellent media rep at Hanley Wood, for forwarding the article link to me.

Let’s say you have a new company. It’s got all the elements of a good brand, but no one knows about it. What’s the best way to break into the market – advertising or PR?

If you answered PR, you’d be right.

Why?

1. Because it’s new, you probably have a great story to tell about the brand. Why you created it, the benefit it provides, etc.
2. PR is going to be more cost-effective than advertising, even in a smaller local markets. This can be a significant consideration for a start-up brand that may have a limited marketing budget.
3. Advertising builds effectively over time, but it’s costly. So, unless you’ve got deep pockets, you’re not going to launch a new brand with extensive advertising. PR is going to be much cheaper and more effective with the initial brand launch.
4. Another subtle benefit of PR is the implied endorsement of your brand from the media that runs a news story about it. This is very powerful and you just can’t buy that kind of influence.