The Law of Tellis & Tellis (on advertising in a recession)
Updated: Nov 29, 2020
When Sam Walton was asked about the recession of 1991 he said, “I’ve thought about it, and decided not to take part”. In 1991 Wal-Mart became the world’s largest retailer with a net sale of $43.9 billion.
In a recession, companies face declining revenues and shortages of cash. Their natural tendency is to cut back on discretionary expenditures such as R&D, marketing, and advertising.
Over the decades, a number of studies have examined what happens if companies go dark or cut back on their advertising.
Gerard Tellis & Kethan Tellis have studied 40 academic reports from 37 countries on the effectiveness of advertising. The studies covered every recession in the 20th century, starting with the Great Depression of 1921.
What did they learn? We call it the law of Tellis & Tellis.