What happens when brands stop advertising?

Adam Gelzinis, Rachel Kennedy, Virginia Beal, Nicole Hartnett and Byron Sharp of Ehrenberg-Bass Institute wrote an article titled What happens when brands stop advertising?

« Sales down 16% after 1 year on average »

« Sales down 58% after 5 years on average  »

«  We identified 57 cases where a brand cut all mass media spending for a year or longer¹. The sample of cases includes different sized brands and brands with varying sales trends (e.g., growing, stable or declining). Some brands stopped advertising for many years, whereas others stopped for only one »

« For each case, we documented brand sales in unadvertised years and compared this to sales in the last advertised year. We could then see how aggregate sales changed over time when advertising stopped relative to when the brand was advertising².  »

« Sales typically decline gradually after advertising stops  »

« In the first year without advertising, the mean sales index is 84, though there is wide variation around this average. The spread widens after two years without advertising, yet there is a downward trend in sales for the majority of cases. Despite the variation, decline becomes more common and greater in magnitude as brands go longer without advertising. After four years without advertising, there are no cases with higher-than-base level sales.  »

« Bigger brands are bought by more people and tend to be bought more often. They also enjoy greater mental and physical availability, which means their advertising tends to be more efficient. In this dataset, brands varied quite a lot in sales volume. »

« Bigger brands decline slower on average… This ‘size advantage’ for bigger brands is consistent with the Institute’s research that shows lower ad elasticities for larger brands, and lower ad intensiveness (Danenberg et al 2016), and fits with the evidence regarding mental (and physical) availability. A brand’s sales rest largely on its relative availability amongst consumers, and bigger brands have greater mental availability than small brands. Stopping advertising means brands cannot build or refresh mental networks through mass communication, but other nudges come from buying or using the brand, seeing other people buy or use the brand, or seeing in-store displays and activations (which typically also favour bigger brands). The upshot is that bigger brands’ greater mental and physical availability will likely better insulate sales from decline after stopping advertising compared to smaller brands.   »

« Sales trends before stopping relate to trends after… The average rate of decline was fastest for already declining brands. If a declining brand goes unsupported, these patterns speak to dire consequences; sales halved on average in a period of two years.  »

« All big and medium sized brands that were previously growing (n=8) continued to grow for 1-2 years after stopping. In stark contrast, all previously growing small brands (n=10) stopped growing and declined below their base-level sales. This suggests an advantage for bigger brands akin to greater “momentum” in sales growth. An already-large and growing brand may continue to grow without advertising support because of scale advantages in other marketing functions and market-based mental and physical availability. While smaller brands appear to rely more heavily on their advertising to drive mental availability and continue growing. »

« Without refreshment, mental availability erodes… And since light brand buyers are the biggest group of any brand’s customer base and are the most important group for brand growth (see Report 73), the time off-air could prove costly, particularly for smaller brands.  »

« Maintaining a brand’s market share requires a sufficient share of voice for its size.  »