The numbers tell the story. In the first half of 2001, advertising revenue fell 5.9 percent, compared with the same period a year ago. Online advertising revenue in the first six months fell 7.8 percent. In the wake of the Sept. 11 terrorist attacks, Wall Street analysts expect ad revenue for 2001 to fall 9 percent. Consequently, media companies and advertising agencies that were riding the wave of euphoria in the recent past, are struggling. Although one of the first casualties of a slowing economy is advertising, experts suggest that it is unwise for companies to cut back on their marketing spending.

"Historically, companies that have continued to advertise their products during a recession, end up higher after the recession is over," says Christie Nordhielm, assistant professor of marketing at J.L. Kellogg School of Management. "There’s plenty of data to prove that."

For instance, a study that Cahners Publishing conducted in 1980 in cooperation with the Strategic Planning Institute (SPI) of Cambridge, Mass., found that companies that increased advertising expenditures by more than 28 percent in a recession nearly doubled average increase in its market share, compared with companies that reduced expenditure.

Nordhielm asserts that during a recession there is a lot of consolidation and one way to survive being bought out or acquired is to be out in the marketplace through advertising. Many cash-strapped companies are reluctant to advertise in tough times because marketing expenditure can mean the difference between staying positive and running into the negative. But such a narrow focus does not recognize that continuing to advertise rakes in greater returns on investments in the long term, she says.

Many advertisers complain that companies that are currently employing them to do their campaigns have developed a risk-averse attitude, preferring to apply time-tested techniques. Dave Banerjee, director of strategic planning at L3 Advertising, says that current ads have no spark and cannot emotionally move consumers, because companies are shying away from pursuing new ideas.

“We think they should save their money if they are not willing to stand out,” says Scott Glaser, managing partner at The Planning Board, which provides marketing services and helps companies review their business model and funding strategies.

But this reluctance may also emerge from companies becoming more RoI-driven. Peter DeSouza, senior vice president of client services in Admerasia, says that financial accountability has become much more intense.

“Business as Usual”

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