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Effects of Recessions on Advertising Expenditures: An Exploratory Study of Economic Downturns in Nine Developed Nations

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  • Robert Picard

Abstract

This article explores the effects of recessions in developed nations since 1989 to determine how advertising expenditures are related to recessions and whether expenditures for different media are affected differently. The study finds that advertising expenditures (in constant currency) declined an average of 5% when a 1% decline occurred. The relations between the gross domestic product and advertising expenditures were not universal across the nations, however. It appears that nature of the economies, the degree of economic fluctuation, segments of industry affected, national economic policies, and other factors may play roles in the advertising expenditure choices. The study also finds that print media are more affected by recessions than broadcast media. The effect of the economic downturns on newspaper and magazine advertising expenditures were 4 times that of the effect on television advertising expenditures.

Suggested Citation

  • Robert Picard, 2001. "Effects of Recessions on Advertising Expenditures: An Exploratory Study of Economic Downturns in Nine Developed Nations," Journal of Media Economics, Taylor & Francis Journals, vol. 14(1), pages 1-14.
    • Handle: RePEc:taf:jmedec:v:14:y:2001:i:1:p:1-14
    DOI: 10.1207/S15327736ME1401_01
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    Cited by:

    1. Al-Gamrh, Bakr & Rasul, Tareq, 2024. "Recession-proof marketing? Unraveling the impact of advertising efficiency on stock volatility," International Review of Financial Analysis, Elsevier, vol. 92(C).
    2. Del Barrio-García, Salvador & Kamakura, Wagner A. & Luque-Martínez, Teodoro, 2019. "A Longitudinal Cross-product Analysis of Media-budget Allocations: How Economic and Technological Disruptions Affected Media Choices Across Industries," Journal of Interactive Marketing, Elsevier, vol. 45(C), pages 1-15.
    3. Esteban-Bravo, Mercedes & Vidal-Sanz, Jose M. & Yildirim, Gökhan, 2015. "Historical impact of technological change on the US mass media advertising expenditure," Technological Forecasting and Social Change, Elsevier, vol. 100(C), pages 306-316.
    4. Fridriksson, Kari S. & Zoega, Gylfi, 2012. "Advertising as a predictor of investment," Economics Letters, Elsevier, vol. 116(1), pages 60-66.
    5. Rollins, Minna & Nickell, David & Ennis, Justin, 2014. "The impact of economic downturns on marketing," Journal of Business Research, Elsevier, vol. 67(1), pages 2727-2731.
    6. Demsar, Vlad & Sands, Sean & Campbell, Colin & Pitt, Leyland, 2021. "“Unprecedented,” “extraordinary,” and “we're all in this together”: Does advertising really need to be so tedious in challenging times?," Business Horizons, Elsevier, vol. 64(4), pages 415-424.
    7. Deleersnyder, B. & Dekimpe, M.G. & Steenkamp, J-B.E.M. & Leeflang, P.S.H., 2007. "The Role of National Culture in Advertising’s Sensitivity to Business Cycles: An Investigation Across All Continents," ERIM Report Series Research in Management ERS-2007-095-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    8. Ambarish Chandra & Matthew Weinberg, 2018. "How Does Advertising Depend on Competition? Evidence from U.S. Brewing," Management Science, INFORMS, vol. 64(11), pages 5132-5148, November.
    9. Lamey, L. & Deleersnyder, B. & Dekimpe, M.G. & Steenkamp, J-B.E.M., 2005. "The Impact of Business-Cycle Fluctuations on Private-Label Share," ERIM Report Series Research in Management ERS-2005-061-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    10. Zeynep Bayazit & Elif Guneren Genc, 2019. "An Analysis of Reciprocal Influence between Advertising Expenditures and Gross Domestic Product," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 41-47.
    11. Andres Silva & Lindsey M. Higgins & Mohamud Hussein, 2015. "An Evaluation of the Effect of Child-Directed Television Food Advertising Regulation in the United Kingdom," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(4), pages 583-600, December.
    12. Artem A. Eremin, 2014. "The Effect of Advertising on Economic Growth in the USA from a New Methodological Perspective," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 3-14.
    13. M. Rimscha, 2013. "It’s not the economy, stupid! External effects on the supply and demand of cinema entertainment," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 37(4), pages 433-455, November.

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