Recession: A perfect time to build your brand?

The vast herd of investors knows they should buy low and sell high, but end up doing the opposite: putting their money in stocks or funds that are already doing well and then delaying when they get out of a falling investment because of the wishful thinking that “it will go up again”. Sophisticated investors, on the other hand, tend to be better at actually buying low and selling high and avoiding the movements of the herd. Branding, because it is an investment, is similar. Most marketers invest heavily in their brands when the economy is going well and cut back in a recession. But correlating marketing spend with the economy is dumb because it ignores at least two key facts: First, maintaining or increasing brand promotion during a recession gives you more share of voice, because most of your competitors (aka “the herd”) are cutting back. Second, promotion during a recession becomes more efficient because the cost of media drops with the market. In other words, a recession is a perfect time to build your brand and grab market share and more profit. Studies show that marketers who increased the marketing spend on their brands during a recession achieved an average return on capital more than five times that of those who just maintained their marketing spend. In the downturn of the early 90s, for example, Nike realized a nine-fold increase in profits from a three-fold increase in marketing spend. So, the question you need to ask yourself is this: Are you a sophisticated investor in your brand, or do you follow the herd?

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