(This article originally appeared in Fortune)
The government’s stimulus plan won’t work as planned if we don’t get consumers spending again. But in the nearly $800 billion package, there is one thing missing that would surely help accomplish this: advertising. To get people spending again, and the economy moving, the government needs to provide help for businesses in America to advertise their products and services.
Let me disclose that I do have a horse in this race: I’m an investor in advertising-supported businesses. I’ve spent a large percentage of my working career in businesses that sell advertising — including broadcast and cable TV, radio, magazines, Internet, newspapers and direct marketing. I’ve also led businesses that have used these media to advertise products and services.
Having looked at advertising from both sides, I developed a healthy respect for the power and necessity of strong advertising to the success of any business.
There’s a reason that America is the largest consumer market in the world: It also happens to be the largest advertising market in the world. Advertising works — and it has been proven again and again for over a century. Every successful business spends money on advertising, everything from public relations to TV to Internet-search advertising.
But today’s businesses have responded to the economic crisis by radically cutting payrolls and other expenses, which includes advertising budgets.
We are now at the lowest levels of consumer spending in recent history — it fell at a 4.3% rate in the fourth quarter of last year, the biggest drop in nearly three decades — and the lowest levels of advertising spending as well. There is a connection. Maybe, just maybe, some of the current drop in consumer spending is the result of cuts in advertising.