Why Recessions Are Good

Hi Ryan,
Thank you for the great article! – I agree with you 100%
Keep up the great posts.
Kind regards,
Saul Maraney
Johannesburg, South Africa

I disagree with you totally, Ryan.

Just kidding. I didn’t want you to think you’d only get the “likewise” comments. ;-)

Seriously…when the going gets tough, the tough go

a.) Shopping?
b.) to Hawaii?
c.) Crazy?
d.) back to Mom & Dad’s?
e.) tell it on the mountain?
f.) all of the above
g.) none of the above
h.) ballistic at multiple choice answers
i.) back to work?

Ryan:

Where do the people go … who can’t find jobs?

In a recession … jobs are harder to keep … so, who really has the staying power to outlast a recession?

I’m with you, I think we need the recession to prune the dead wood.

Businesses do not take a vow of poverty at their incorporation.

If they have to go under or trim employees, then that is a business decision. If they can suck up new clients and customers when everyone else is in their recession frenzy then I think we are just seeing proof that survival does go to the fittest.

@Saul – Thanks for the comment!

@Tony – Nice. Actually, options c, d, and i all ring true to one degree or another.

@Kingsley – People who can’t find full-time jobs either take multiple part-time jobs, become self-employed in some fashion or other… or collect welfare checks and scrape by.

In severe cases, they may choose to move in with other family members and pool resources until they get their feet back on the ground.

Every situation is different.

In the case of this particular recession, nobody knows how long it will last. If it lasts for years, then very few people will have the staying power to outlast it without being affected.

@Mike – Believe it or not, getting fired or forced into a new business can be very positive. Harvey McKay wrote a book We Got Fired! And It Was the Best Thing That Ever Happened to Us (or something like that). It’s a collection of stories from famous people who got fired and went on to become super-successful as a result. We all need wake-up calls every now and then. :-)

Ryan,
I work for an ad agency where I write copy for corporate videos, brochures and newsletters… been doing this many years and I love it!
I compliment you on what I would term a “folksy” writing style.
Please take this as the compliment I intend.
Maybe it’s because I am writing in ‘corporate speak’ genre day after day here, but I truly look forward to receiving your well-written, sensible K.I.S.S. messages.
You truly have a gift that I have come to recognize and appreciate.
Keep it goin’!

James

Another benefit is that people stop buying silly stuff and start investing more in things that are going to make their lives better.

Instead of buying a TV that’s a few inches bigger than their current one, they’ll hopefully buy more good copywriting or our business building products.

And last I heard, the internet is still expanding so those of us that are capitalizing on it are golden. Making more money, saving money or finding an easier way to do things isn’t going out of style anytime soon.

Who says we’re in an ordinary recession? It has already been a year (the average one lasts 8 months) and shows no signs of abating. It is going to get a lot worse before it gets better. There’s a huge domino effect still in play. First you had the collapse of sub-prime mortgages (1 in 10 of all mortgages in the US today are either in foreclosure or behind in payments by 30 days or more); second, the banks stopped lending – with devastating consequences to any company needing to buy inventory or make payrolls; third, the consumer has reined in their spending both online and offline, partly due to inability to obtain credit; fourth, defaults in car loans and credit cards have skyrocketed; and fifth, commercial mortgages are next – watch for more retailers shutting down stores and/or filing Chapter 11 after the Xmas season.

These facts may be redundant to most of you, but it’s in the minds of your clients. Let’s hope you won’t have to do too much hand-holding to get their business.

That said, I agree, if you have incredible staying power and can survive this near depression, this will present the opportunity of a lifetime to “clean up” after the devastation. (Reminds me of the scene in “Forrest Gump” where Gump and Lt. Dan survive a hurricane and end up being shrimp tycoons.)

It’s getting through the hurricane that’s the hardest part.

Don’t give up.

A.J.

Hopefully I am allowed to post more than one comment on the same subject.
If I counted the numer of headlines I’ve read similar to the following within the past year , the number would be staggering:
HEADLINE – FROM YAHOO (ABC NEWS)
Come March, California will be out of cash for even day-to-day operations.

Why don’t we call this thing what it really is –
A DEPRESSION!!!

I agree. In addition, recessions are also good for copywriting. Psychologists attempt to explain the mind and brain in the context of real life. Psychologists study such phenomena as perception, cognition, emotion, personality, behavior, and interpersonal relationships. Marketers attempt to exploit the mind and brain in the context of business and capitalism.

Marketing is about studying and understanding basic human psychology. If you understand why people do the things they do, the pull of your marketing literature will be triple that of your competitors.

As William Bernbach said, “You can say the right thing about a product and nobody will listen. You’ve got to say it in such a way that people will feel it in their gut. Because if they don’t feel it, nothing will happen.”

The most powerful emotion that you can exploit in your readers is that of fear. During a recession then, it is much easier for a copywriter to take the increased level of fears and anxieties in the market place and use those fears to sell a product.

People buy because of fear.

People fear death. They fear getting old. They fear going broke. They fear missing out.

Fear comes in many forms and is the most powerful motivator causing people to buy. Always try to work fear into your marketing literature.

OnStar used fear to make billions. Their best pulling ad was an actual recorded call of a little girl saying, “We just had an accident and my Mom isn’t moving, please help!” This planted the idea in peoples minds that what if that happened to me when I was driving? What would my daughter do if we did not have OnStar?

The tragedy that results in market cycles can be used to make money. I wrote a sales letter for a property management company that advertised their single family home services with the headline, “Afraid Of Losing Your Home To Foreclosure?”

Anger is a subset of fear. On 911 Americans, across the country, went out and bought American flags to hang on their houses and cars. Fear lasted about 3 days after the attack, then anger took over.

Anger can be a very powerful motivator. People hire a lawyer to sue because they are angry at someone. People will go to war because of anger.

Always consider both fear and anger and which is stronger. For example:

“Afraid Of The IRS?”
“Angry At The IRS?”

In this case, anger is the slightly stronger emotion and is the one you should use in the context above. Here is another example:

“Afraid Of A Fire?”
“Hate Fires?”

Fear is slightly stronger than hate (anger) in the example above and should be the one you use.

Always consider both fear and anger as one emotional category and test both, in the context of your product or service, to see which is stronger.

Perhaps the most famous use of fear in advertising ever was Tony Schwartz’s legendary ‘Daisy Ad’ for the Johnson campaign. Schwartz suffered from agoraphobia, an abnormal fear of open or public places, and so he understood the controlling power of fear very well.

The ad was broadcast on Sept. 7, 1964, during NBC’s “Monday Night at the Movies.” It showed a little girl in a meadow (in reality a Manhattan park), counting aloud as she plucks the petals from a daisy. Her voice dissolves into a man’s voice counting downward, followed by the image of an atomic blast. President Johnson’s voice is heard on the soundtrack:

“These are the stakes. To make a world in which all of God’s children can live, or to go into the dark. We must either love each other, or we must die.”

Now that’s powerful marketing!

Following up on Lance Jepsen’s remarks…
Now I know why I never finished my AWAI course. Direct Response Copywriting seems to be all about preying on people, their fears, their angers. Powerful as those emotions are, they don’t sit well with me from a moral perspective. I don’t like to prey on people. I’d rather sleep at night. Your response seemed cold and clinical, like people are suckers ready to be fleeced. Sounds a bit amoral.

Now that a severe recession is upon us, it’s “reassuring” to know that the vulture marketers will only redouble their efforts to terrify an already frightened public into buying things they don’t need.

I stopped falling for the hype years ago when my own unhappy experience showed that most of the products peddled through Direct Response Marketing failed miserably to live up to the expectations as promised by the copywriter.

I wish it were otherwise, but I’m tired of getting my money back. I’ll do my own research and talk to friends and family before I buy again.

Let’s hope this recession ends soon.

@AJ
I understand your perspective and perhaps I’m a little selfish, but I’ve started looking out for #1. Sure, there’s a grey area, but what if we step back and look at brand marketing.

Aren’t Nike, Weight Watchers, Geico, etc. all selling something more than a tangible product? Emotional response is not limited to the direct response world in any sense.

Actually, you could say that copy gives people the chance to self-select. If I don’t identify with what your saying, I’m not a potential customer–adios.

So, recession or not, I’m looking for *my* hungry audience.

I see your point Mike. I guess I’m coming from the fact that whenever I’ve given in to emotion and fallen for the “we’re only offering this special price until next week” hype, I’ve usually been disappointed.

I, too, have learned to look out for #1. I try to keep emotion out of purchases. That avoids a lot of buyer’s remorse.

Huh, I suppose if Geico, et al stopped using emotion, their ads would be pretty boring, right? (But still, I’d shop around for insurance, English gecko or not!)

To be fair, the world of direct response copy is huge. Who says I have to prostitute myself for a buck?

Apologies if this went off-topic.

Wow! Some really great comments. Thank you. Let me take a moment to respond:

@James – Thank you for the compliment. I really appreciate your encouragement. Also, I agree: It is a depression of catastrophic proportions. I’m just trying to look at the positive side.

@Louis – Great observation. Let’s hope that holds true (fewer frivolous purchases and more genuine business/career investments).

@A.J. – As you point out, this is no ordinary recession.

@Lance – Very insightful. Similarly (in a different discipline altogether), some stock traders made a killing after 9/11 by shorting the market. There are always opportunities to profit during misfortune. Not condoning this; just stating it as fact.

@A.J. & Mike:

Salesmanship will always succeed based on how well it appeals to the emotions. We buy on emotion, justify on logic.

I can analyze many of hundreds of different purchases I’ve made in this fashion.

That said, direct response marketing/copywriting CAN be taken too far. But how far is too far?

That is all in the eye of the beholder.

Just the other night I was talking with my Dad about how there are so many gray areas in the world today. It seems we have to grapple with hundreds of issues today that people NEVER even thought about 100 years ago.

Some may say profiting from other people’s misfortune is inherently evil. But allow me to ask:

Would you sell a life preserver to a drowning man?

Of course, you would.

And so long as you didn’t charge an exorbitant price, I think it would be completely ethical to sell that life preserver.

Likewise, if you call an ambulance, the hospital charges you for that service. Is it worth it? Absolutely!

Anyway, the point is: I don’t believe it’s unethical to profit from misfortune, so long as it’s done in a tasteful, ethical manner.

Everybody’s “ethical threshold” will be different based on their personality, upbringing, religious beliefs, etc.

We should all have a certain level of tolerance when it comes to these things. There are many gray areas, and we will all have different limits since almost nothing is black and white these days.

Who gets the axe first in tough times?

The guy who does just enough to get by or the guy who under promises and over delivers?

Some people put way too much focus on things they can’t control like the economy, politics and other people.

When all is said and done and the doo-doo hits the fan it all comes down to whether you’ve done what it takes to become a person who consistently provides massive value to the marketplace.

Notice I didn’t say “seen or recognized as a person who provides massive value.”

When at the core of who you are lies an identity of a person who protects their clients, does way more than they’re paid for and who’s word is golden…

It doesn’t matter what peoples perception is of you.

Not everyone filters their experience of life in the same way. So, no matter how awesome you are, not everyone’s gonna see it.

But, if at your core you’re a stand up person, you can take your show on the road and you’ll attract people who can see it and welcome you with open arms.

And like Ryan said, if you’re less than committed to your craft you’ll be found out by the market place and come to your own conclusion you need to move onto something else.

People who manage themselves (emotions and time) effectively will be the people who can weather any storm.

In turbulent times people are anxious to find people they can depend on.

This is why it’s so important to focus on what beliefs are driving your current behavior.

Guys like Dan Kennedy and Eben Pagan are fond of the idea of working just as hard on yourself as you do on your business.

YOU are what makes your business work.

With a belief like “Obama’s gotta do something to help people with jobs” you’re giving away your power.

With a belief like “I don’t care if you place me butt naked in the middle of Vietnam, I’ll find a way to build a fortune.” you accept that if it is to be, it is up to me.

Only when we take on full responsibility for our place in life will we have the power to control where we go.

Dan Kennedy put it like this “Responsibility = Control and Control = Responsibility.

Only to the degree that you accept responsibility of something will you have any control over it.

Figure out how you can assert control over what is not working. Control means you’re taking the responsibility to make it happen.

You must take responsibility for all problems and challenges, otherwise you have no control over anything, it’s always something else.

Watch out for loser language like “It didn’t do very well”
versus “I screwed it up” or “Business isn’t doing very well” versus “I haven’t figured out how to fix
it”.

This is revealing information Dan has noticed in the has-beens of the world and his Renegade Millionaire clients.

People who neglect the power they have to shape their mindset into an asset rather than a liability are in for the bumper car ride from hell in this economy.

Thank you Ryan for focusing on possibility rather than doom. I appreciate your transference of your champion belief system.

Note Taking Nerd Number 2
http://www.mynotetakingnerd.wordpress.com

Ryan,

What if the drowning man doesn’t have the money for the life preserver? What are you going to do then, let him die?

Profiting from misfortune: yes, it’s a very gray area, but just the idea of it makes cringe.

This could be a topic in and of itself!

@Note Taking Nerd – Excellent comment! Accepting responsibility is scary at first, but absolutely necessary for our growth and success.

@A.J. – If a man is literally drowning, I would throw him a life preserver if I had one — no charge. If I didn’t have one, I might try to save his life by swimming out to him (assuming it was possible; no sense swimming into a rip tide).

My analogy is intended to be taken figuratively.

For instance, a “drowning man” might be somebody who is drowning in debt. The “life preserver” might be a process whereby I can negotiate lower payments or an overall reduction of his debt. Should I not be compensated for this?

Certainly, everybody can offer their “life preservers” pro bono (free of charge). But at some point, you have to make some money to live.

Also: Keep in mind that advertising and marketing are what drive the profit of most (if not all) businesses. So even if you are an accountant or customer service associate or whatever — your income is ultimately still derived from advertising and marketing.

We are all “guilty by association” — so to speak.

And yes, this is probably a topic for an entirely separate blog post. :-)

Ryan wrote: Whenever there is a recession, it’s actually a good thing for many businesses.

He didn’t say it was a good thing for all individuals. Having experienced more than one recession in my life, what Ryan writes rings true to me. It’s no fun losing a job. I always managed to find another one. It’s even worse if you lose a house to foreclosure because you can’t make the payments.

Businesses need to clear out the useless and unneeded. In the long run they get stronger. Not always but that’s another story.

@AJ – I think you’ve taken the “fear factor” out of context. If you are selling a good product that benefits the people that buy it, then good emotional sales copy that gets them to buy it is perfectly ethical. It’s certainly not legal or ethical to lie about it.

How about selling bottled water to people after a disaster? As long as it’s at a normal price, I don’t see anything wrong with it. There’s also nothing wrong with giving it away. If your own livelyhood is depends upon selling things for a profit, then you may not be able to give it away. But selling each bottle for $10 when the regular price is $1.50 then there’s a problem.

It simply amazes me that more people don’t understand the basic business cycle and why it’s good and necessary for there to be a downturn.

We as a society seem to have reached a point where we think that stocks always go up (or that they should), that real estate always goes up (or that it should), that someone owes them a job, that the government should take care of them (eg: unemployment insurance, welfare, disability, tax refund payments, etc.), for that matter that the government can take care of them.

Don’t count on it.

The fact is, nobody owes you anything, except to treat with respect as a fellow human being (and so many folks don’t do that).

We are all fully capable of finding a way to feed and shelter our families. It’s just a matter of getting out there and getting it done.

I’ve been laid off many times in the years past (mostly in the 70s and early 80s – not since). I’ve worked for businesses that went bankrupt and shut their doors though. Not fun. I’m still here though.

I’ve had to close two businesses my wife and I owned. One was profitable but not enough so. One we closed because we were tired of losing money and didn’t want to ride it all the way to bankruptcy. I’m still paying for that one. But I took on the debt and I’m responsible to pay it. I don’t expect anyone else to take care of that.

By the way, the drowning man analogy doesn’t work. Of course we would throw him the life preserver. That’s a life and death decision made in an instant.

It does bring up another subject for another day. Should you give away knowledge that is truly valuable just because you know it and don’t need the money? Or should you still sell it because people tend to not act on free information and do when they pay for it?

Give a man a fish and he eats for a day. Teach him to fish and he’ll never be hungry again.

Cheers.

Right on Ryan.

I stopped talking to all my “doom & gloom” friends and instead choose to hang with people who see opportunity.

My business has been booming since October and just keeps getting stronger.

Kyle,

Since you’ve stopped talking to ALL of your doomers and gloomers (others may call them realists) we now know at least one thing.

1. Your 2008 Christmas party guest list dropped like the stock market.

I’m truly glad your business is booming, but please, wake up; read, listen and watch… over half a million people lost their jobs last month, so obviously, many other businesses are NOT booming. This Recession (for the dreamers), Depression (for the realists) is here and it’s real.

James, I’m not saying the “Recession” isn’t real.

I’ve lost a TON of money in the stock market (just like millions of others) and can tell you that hurts. I see what’s going on around me.

But at the same time I see opportunity and am grabbing it with both hands… and because of that my business is booming.

I see my friends split fairly evenly between people who do nothing but complain about what’s happening *to* them, and those that take action and responsibility for what *they* create for themselves.

Guess who is doing better financially?

@James – don’t think for a minute that most of us (can I justify speaking for others?) don’t care about the folks that have lost their jobs. We do. I really feel for them.

We can choose to focus on the negative aspects of what’s going on. Or we can choose to focus on the positive aspects.

I happen to think is more productive to focus on moving forward in a positive manner.

In 1979 I was a construction worker. After getting sick of being laid off more than I worked, I became an auto mechanic. My boss laid me off after I trained my cheaper replacement. I happened to know someone that knew I worked hard and he hired me to sand cars in his body shop. Not glamorous but it paid the bills. Eventually I ended up back in the transmission business for a few good years. That’s actually where I learned to sell. And that honesty was indeed the best policy.

Eventually I went back to school and learned basic electronics and computers. I’ve never been laid off since. Not because it couldn’t happen. I had finally gotten smart enough to spot those kinds of things coming and always took action to find work with another more stable company.

I haven’t seen a downturn in copywriting or in my other line of income generation either.

That doesn’t mean I won’t. That doesn’t mean I will.

During the Great Depression in the 30′s the unemployment rate hit 25%. That means the other 75% were still working. Not necessarily for great amounts of money, but it put a roof over their head and food on the table.

I’m not saying it would be a good thing if we hit those numbers again. But even if we do, somehow we’ll get through it. We did last time.

Besides, President-elect Obama will fix everything. :)

Cheers.

Some people witing for this time that they could make money especilly invest in “bluechips” stock.

Friend of mine, make USD700 to USD1000 in 3 days during this time.

Like Warren buffet love this recession day.

Ryan, point taken. If people need and want something, there’s nothing wrong with trying to make a living off that.

What I’ve noticed all through this thread -whether its been overt or not – is the need to take full responsibility for whatever happens to you. Jack Canfield – the co-author of the first Chicken Soup books – and a few others believe this very thing. I admit, this idea seems very hard to swallow especially when it appears that events outside of your control have forced change upon you (getting fired, experiencing a tragedy, etc.)

But I see his point. What choice are you going to make now that this thing has befallen you?

We can’t all lay down and die. That would be asinine. (Besides, who would take out the garbage?)

As for this economic “cleansing” we’re experiencing, why not look at it as a “gift”, an opportunity to grow, to get closer to our passions, instead of just chasing a buck? (Gee, maybe getting fired IS the best thing that could happen to someone stuck in a rut. I just wish it didn’t come with all the emotional turbulence!)

I know I may come off sounding like a motivational speaker when I say this, but what opportunity could we find in this crisis?

To: Perry

Very well written with valid points.
I never, for one second, believed we wouldn’t eventually see our way through these muddy waters… I have full confidence we will bounce back because we have no other choice if we are to survive.

I just sometimes have difficulty with people who won’t “call a spade a spade”.

From my point of view –
1. We ARE experiencing a depression.
2. They’ve (recessions) happened before.
3. We WILL, in time, be a stronger, more united and wiser people.