During the Great Depression, cereal company Kellogg's boosted its advertising spending while competitor Post sharply cut back.

Fast forward to the nation's eventual recovery years later. By then, Kellogg had pulled well ahead of its rival and retained that lead for decades.

It's a story often repeated by ad executives in an attempt to persuade skittish clients that spending during a downturn can pay long-term dividends. Some Denver advertising agencies are having more success than others getting that double-down message across - and a handful are even notching billing increases and adding staff in spite of the recession.

"There's always that debate: When things get tough, should you cut your marketing?" said Joe Conrad, founder and CEO of Denver ad agency Cactus, whose firm has nearly doubled annual billings to $20 million in the past two years and hired another 12 employees in the past four months. "But you need to continue to invest wisely and smartly, and make your budgets work harder."

Factory Design Labs even has the leeway to be "very selective" when agreeing to take on new clients, focusing only on companies that complement Factory's existing clients and offer the agency "the ability to reinvent the industry in which they live," said Scott Mellin, chief executive of Factory.

The agency, whose primary clients are Audi, Oakley and The North Face, increased its staff nearly 22 percent at the end of last year for a total of 93 in anticipation of its 2009 business plan, he said.

That kind of hiring is in stark contrast to the rest of the ad industry, which is laying off staff in anticipation of a lean year. More than 6,900 advertising jobs have been lost across the U.S. this year, according to BNET's Ad Agency Layoff Counter. That includes 40 when Denver agency McClain Finlon shuttered its doors last year.

The health of the advertising industry comes into stark focus every Super Bowl, where agencies pay as much as $3 million for 30-second spots.

Many of the Denver agencies that are thriving are doing just the opposite. Motive focuses on experiential advertising, such as mobilizing a street team during the Democratic National Convention to hand out "Burritos for Obama" and other similar themed T-shirts on behalf of Qdoba. Motive also has worked with Mountain Dew, coming up with the idea of having the caffeine-packed drink rally behind the emerging extreme sport of mountain unicycling.

In this quickly changing economy, companies "need agencies that can move quickly and turn on a dime," said Matt Statman, founder and head of Motive. The downtown-based agency hired five people in the past year for a total of 13 and has a stable of freelancers as well.

Statman pointed to Pepsi's recently launched rebranding campaign, which Motive had a role in during the concept stage. Pepsi wanted it turned around in eight weeks.

"We're talking about one of the biggest brands in the world saying: 'We want agencies that can concept, develop and execute a program within a matter of weeks,' " Statman said. "That is unheard of in the traditional landscape that we know of."