"Advertise, or go under"

US adspend to fall 15.4% - Warc News - Warc

NEW YORK: Advertising expenditure in the US will decline by 15.4% this year, to $162.1 billion (€109.3bn; £102.0bn), before returning to growth of 0.2% in 2010, according to a new forecast by Magna, part of Interpublic Group.

via www.warc.com

It's not that this is really even news. Anyone who works in the business--client side or agency side--knows that the declines in spending have been dramatic.

The media most deeply affected by this downturn are what you would expect--newspapers, television, magazines, and outdoor--all "traditional" media that each face their own wrenching problems apart from the economic crisis.

Panera's simple strategy: targeting people with money

Yesterday's Wall Street Journal ran a piece about Panera Bread Company and how it is using a unique approach in the recession:  instead of cutting prices they are holding the line and, in some cases, actually raising prices (selling a $16.95 lobster sandwich in their New England Stores). A sample of their thinking:

"Most of the world seems to be focused on the Americans who are unemployed," says Panera Chief Executive Ron Shaich. "We're focused on the 90% that are still employed."

The strategy seems to be paying off. While Panera is not setting records, same store sales are up, profits are holding, and key indicators like average customer check are rising.

There are always particulars to consider in any case. Panera is a very well run company with tight controls. They know what they're doing and they have a good track record in testing products with real customers, pushing hard when they succeed, and not being afraid to pull back when they fail.

There are some interesting strategy lessons here:

The paradigm shift we'll see courtesy of this recession

The Wall Street Journal today ran a front-page piece on how the recession is turning some traditional malls into ghost towns. It's a sobering piece, and a reminder of the depth of this recession. 

The financial collapse we are in the midst of is different from any recession we've experienced in most of our life times--and that's because this recession is driven by a banking crisis unlike anything since the 1930s. The implications are far-reaching, and anyone who plans advertising for major retailers needs to rethink the rules of the game.