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Josh Bernoff of Forrestor's Research posted a blog that social applications will thrive in a recession. I have no problem with his conclusions, but he makes a controversial statement that awareness advertising is ineffective in a recession and that marketers should consider advertising that targets the consideration phase with which I take issue. I will argue that awareness advertising is precisely the type of advertising a marketer should pursue in a recession. Let's start with Josh's statement about awareness advertising:

Advertising (or as we often call it, "shouting") is mostly about generating awareness and reinforcing brands. In a recession, ordinary consumers like you and me aren't as willing to spend. Sure, we'll be aware of the product, but that doesn't make so much difference when you're worried about your future.

and let's see his point about the consideration phase:

You may resist advertising if your finances are tight, but if your bud tells you that new movie is really worth seeing or that the Gap has the cutest new tops, that's more persuasive than advertising. Basically, in a recession, the consideration phase is more important than awareness

Did you see the problem here? In the awareness comment he notes that in a recession that consumers are not willing to spend, then he promotes consideration phase advertising to encourage purchase. The problem is that the pot these ads are competing for are much smaller than usual and definitely much smaller that it will be when the economy picks up. Now, I am not saying consideration advertising is not important - you still need to sell and friend recommendations are important - but, many consumer decisions in a recession are made based on price and value. In a thriving economy, if we get 3 friend recommendations for restaurants, we may actually go to all three in a month. In a recession, we may not even go to one. My key point here is that in a recession immediate conversion should not be your primary goal; Awareness should be your primary goal.

In a recession, it is less about what consumers buy today and more what will they buy when they start spending again. Research shows that in markets with a great deal of choice where the product is not a commodity consumers tend to buy recognizable brands. What better time to build brand than in a recession. As Josh observes, "In the 2001 recession, US advertising dropped 9% and Internet advertising plummeted 27%". A drop in ad spending means a drop in ad prices as less companies are bidding up the prices. This makes awareness ads relatively cheaper in a recession than in a boom cycle. Therefore, awareness advertising in a recession has two compelling benefits: 1) It is relatively inexpensive to build brand recognition; and 2) it will improve your brand's positioning for when the economy recovers.

If we agree that awareness advertising is important in a recession (and I hope I persuaded you), then I want to comment on challenges with awareness advertising on the internet. The internet has allowed granular level tracking that traditional advertising never could. This has made advertisers and analysts in this new age focused on click-thru rates or some other type of conversion. I remember hearing Jason Calacanis in an episode of Steve Gilmor's The Gang state social networking ads are no good because they don't convert! It is a fascinating comment that is shared by many people, but I would like to examine the underlying assumptions of the comment. The comment assumes conversion is the only successful result for advertisements. Search got people focused on this, but I argue that it is incorrect. Why does Pepsi spend so much money on TV ads? Why do people buy space on bulletin boards in Times Square? Why does Starbucks invest so much in ensuring every Starbuck's location has the same look and feel? These do not directly cause conversions. What they do is build brand that raises the chances their good will be selected over others when people make purchases.

This article is not meant to discuss the power of brand, but I ask that you take it as true. Now, I ask if building brand is so powerful, why do ads on the edges of Facebook must have click-thru's in order to be considered successful. Often (brand) awareness advertising just wants to get impressions. Expose consumers to enough impressions and sales should increase. They do it all the time for TV ads. Proctor & Gamble would calculate the frequency of an ads appearance multiplied by the % of the product's target audience that would be exposed to the ad to get Gross Rating Points. They would use these GRPs to predict future sales. I believe that CTM ads on sites like Facebook need to be considered in the same manner. Accept that they are not made to convert, but to build brand awareness (a potentially more powerful effect).

The great news is that the cost of these ads are incredibly low, thus providing a great source of value to a smart marketer. Last point is to remember that the style of awareness advertising should be different from the style of conversion advertising. You are just trying to reinforce brand image - it is a subconscious effect. Conversion's demand engagement from a consumer. Different styles for different goals - be aware. I appologize for the length and scope of this article, but I strongly feel it is an important discussion to have. I encourage other marketers to share their thoughts.

UPDATE: February 22, 2008 - I just saw a Feb 14th post by Aaron Wall who also advocates that companies need different strategies when advertising on social media sites. He suggests that companies find sites that relate to their brand and co-brand with them. I agree this is another strategy that companies can look at. At the heart of it, it is trying to build brand awareness. Great post.