Ditching TV Ads Helps Put Gap Back on Track

Clothing seller sees profit up 40% after cutting marketing costs
By Rob Quinn,  Newser Staff
Posted May 27, 2008 10:27 AM CDT
A Gap customer, left, guys clothes at a Gap store in Palo Alto, Calif., Wednesday, May 21, 2008.    (AP Photo/Paul Sakuma)
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(Newser) – The Gap's balance sheet is back in the black, helped along by its decision to stop spending on TV ads, Advertising Age reports. The clothing retailer slashed marketing spending by nearly a fifth in the first quarter and saw profits leap 40%, even as sales slumped. The Gap has switched its focus to merchandising initiatives instead.

One analyst said it would be "a waste of money" for the Gap to spend on ads in the current climate. "In this kind of an economic environment, traffic is slow anyway, and there's so much competition with advertising," she said. "If there was a time for them to do this, it's not that bad of a time."