Branding is an investment, not an expense

In times of crisis, the cost of investing in Marketing and Branding is analyzed, but not the cost of not doing so.

“Are you thinking about cutting your advertising and/or branding budget?. Do it and tell us in a year’s time if cutting your budget was a good idea.” With this message the IPA (Institute of Practitioners in Advertising) signed its advertisement in the prestigious newspaper The Financial Times. At TOTEM Branding it is clear to us that for a brand, a quick short-term reaction will never be more effective than a long-term investment.

Can brands grow by cutting their budget in times of crisis? Definitely not. In this changing world, there are few things more proven in the world of marketing and branding than the power of branding in a recession. Recession is, oddly enough, an unprecedented opportunity to increase brand awareness, positioning and market share.

These recessionary periods, paradoxical as it may seem, actually provide fertile ground for marketers, backed by their CEOs and boards, to increase their brand’s market share, if they are prepared to think long term. Just as many of the top brands do.

The main characteristic of successful companies is the ability to cope with reduced budgets in some areas while continuing to invest in marketing and branding. Past results show that companies that reduced their spending on advertising and branding saw their sales decline both during the recession and during the following years. While companies that increased their advertising and branding budgets during previous recessions increased sales faster than their competition, not only during the recession but also beyond it.

Dozens of empirical studies revealed that maintaining or even increasing advertising and branding spending during a recession is invariably the right thing to do because it sets a company up to survive the recession (a little) and then thrive (a lot) in the future.

Less courageous marketers will now cut their advertising budgets because their boss told them to, or because they truly believe that the savings from eliminating a campaign will outweigh any impact that advertising or marketing would have generated. The optimal response to a recession is to maintain and, ideally, increase investment in advertising and branding.

At TOTEM Branding, we often ask our clients: “Do you think investing in good branding is expensive?. Well, you don’t know what the bad one costs.” We understand that when faced with crises many companies panic but history teaches us that keeping a cool head and continuing to invest in branding is the right thing to do.