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Banks and retailers should be careful when cutting back on ad spending during the recession.
It might make their customers think less of them.
Data from Ad-ology Research shows that one way consumers gauge a company’s health is by how often the company advertises.
Nearly one-half of the Internet users surveyed said that if they noticed a drop-off in ads from a bank, they believed it was struggling, and 12% believed the financial institution might not be in business much longer.
Conversely, when banks advertised frequently, consumers saw them as committed to business, being competitive or doing well.
The response to retail stores that advertised less was more extreme.
Fifty-six percent of Internet users who noticed a decline in ads from a retailer saw it as a sign that the store was struggling—15% thought the store would go bust, and soon.
On the other hand, frequent retail ads led respondents to feel the stores were committed to doing business, being competitive and—in some cases—healthy.
Retail stores and financial institutions are struggling in the wake of the economic downturn and looking for opportunities to save, but cutting marketing budgets may hurt them in the long run—and the same may be true in other business categories.
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