aaf pres for karsten

Run on banks

NYSE fell almost 50%

Led to Federal Reserve System

THE PANIC OF 1907

THE PANIC OF 1907

Wrigley’s

Began with stock market crash of 1929; lasted through World War II

Stock prices fell 90%

Real disposable income fell 28%

Unemployment spiked at 25%

9,000 banks failed

THE GREAT DEPRESSION

Kellogg’s

THE GREAT DEPRESSION

THE GREAT DEPRESSION

Kellogg’s

Chevrolet

Kellogg’s

Chevrolet

Procter & Gamble

THE GREAT DEPRESSION

Began November 1973 and ran through March 1975

High inflation made worse by war and oil crisis

Unemployment reached 9%

Inflation rose to 11%

Stock market crashed almost 50%

1970S RECESSION

Toyota

Procter & Gamble

FedEx

People magazine

Costco

Microsoft

1970S RECESSION

Started in July 1981 and ended November 1982

Increased interest rates

Slowed the rate of growth of money supply

Unemployment rate peaked at 10.8%

Inflation hit 13.5%

1980S RECESSION

Walmart

Hershey’s

CNN

MTV

The Home Depot

1980S RECESSION

2000S RECESSION

Began with collapse of dot-com bubble in 2001

Post-September 11 economy, Y2K, and accounting scandals

Unemployment reached 6%

Dow Jones worst one-week point loss in history

2000S RECESSION

Apple iPod

Crest Whitestrips

Swiffer WetJet

Axe body spray

Stopped advertisingLoss in top-of-mind awarenessLoss in awareness Negative attitude shiftLowest increase in sales two years after recession

Increased advertisingMarket share increased 1.5%Nearly 5% increase in profits275% increase in sales two years after recession

EMPIRICAL EVIDENCE

Sources: Millward Brown, AAAA, and McGraw-Hill

Recession began December 2007

Credit crunch, bankruptcy, bailouts, and housing crisis

Unemployment rate 7.6%

Drastic shift in consumer behavior since early 2008

“The worst financial crisis since the Great Depression”

CURRENT ECONOMIC SITUATION

U.S. senior marketing executives who believe that during an economic downturn, the marketing budget is the first thing to get cut

CMO SURVEY

Source: Epsilon, “Epsilon CMO Survey,” September 8, 2008

21% Disagree

79% Strongly/somewhat agree

“There’s absolutely a benefit in making changes during a downturn. As one of our vendors said: “A downturn is a terrible thing to waste.”

FRANK BLAKE, CEO, THE HOME DEPOT

Source: The Wall Street Journal, June 5, 2008

Brand-building is long-termTough times are inevitable“We never change the long-term strategy because of short-term problems”–Louis Vuitton CEO Yves CarcellePositive effects of advertising are seen well past the short termCost to maintain advertising is less than cost to begin again

BENEFITS

MOST IMPORTANT ASSET

Customers

MOST IMPORTANT ASSET

SUPERBOWL XLIII

Hyundai5 commercials2009 North American Car of the YearIntroduced Genesis CoupeOver 450 million impressions

SUPERBOWL XLIII

SUPERBOWL XLIII

Vice President of Marketing Hyundai

Joel Ewanick

Vice President of Comedy Humor Division

George Wallace

SUPERBOWL XLIII

SUPERBOWL XLIII

THE OSCARS

THREE YEARS FROM NOW?

January 2009General Motors -49%Ford -39%Chrysler -54%Toyota -32%Nissan -30%Volkswagen -16%Mitsubishi -34%Hyundai +14%

SALES RESULTS

TO CUT OR NOT TO CUT?

WHAT YOU CAN’T CONTROL

WHAT YOU CAN’T CONTROL

The Three M’s:MoneyMediumMessage

WHAT CAN YOU CONTROL?

How do you get more bang with less buck?

MONEY

MONEY

Advance Auto PartsBudget decreasedDumped sports sponsorships and national cable TVIncreased network radioOnly paid for 77% of U.S.23% saved has been reinvested in more radio“Regionalized” a network radio buy

MONEY

MONEY

Grocery OutletNever advertised before recessionNegotiate last-minute availsBuy unsold/cancelled inventoryWeekly flexibilityCover 90% of stores

MONEY

MONEY

Hyundai Dealers (Eastern Region)Voted to increase ad budgetAfforded more media weightSales outpace the rest of the countryJanuary national sales +14%January Eastern Region +20%

MONEY

Focus on vehicles with proven ROI

Narrow target to best prospects and hit them hard

MEDIUM

MEDIUM

MEDIUM

MEDIUM

MEDIUM

MEDIUM

MEDIUM

Chick-fil-ANo change to strategy and spendingHeavy users of outdoorMaintain a “wish list”General Motors canceledSnatched up prime locations

MEDIUM

Construct your message for the times

Consumers don’t disappear–they change their behaviorValue-conscious consumer mind-set and behavior shift since early 2008

“Staycations” and “cocooning”60% of Americans budgeting more this year than last

MESSAGE

MESSAGE

MESSAGE

HyundaiIdentified the real issue–consumer confidenceHyundai buyer assurance programProtection in case of “involuntary loss of income”Addressed fear

MESSAGE

MESSAGE

GameStopTwo targets: gamers and gifters (moms, grandmas, aunts, etc.)Gamers: make sure you get the games you wantGifters: 2,500 games under $20

MESSAGE

ResultsHoliday sales up 22% from last yearBest Buy game sales down 12% from last year

CONCLUSION