Long term ambitions and strategic thinking
Right at the moment there is little for businesses to be certain about, except for uncertainty itself.
Companies are putting decisions on hold and preparing for what may be a bumpy ride, due to worries over Britain’s decision to leave the European Union, concerns over the American election campaign, outbreaks of international terrorism and general political and economic tension.
That means so-called ‘discretionary spending’ – like marketing – is in the firing line. We’ve seen it so many times before: when the going gets tough, the accountants get tougher.
Yet, for any brand-owning company that has long-term ambitions and any kind of strategic thinking, cutting marketing is the last thing they should be doing, ever. Evidence clearly shows that those brands which do best after a recession is over are the ones that increased their marketing spend during the downturn.
"The real winners are the brands that increase their spend."
A study by the UK’s Institute of Practitioners in Advertising and consultancy Malik PIMS back in 2008 proved this. Cut spend, and brands lose market share in the recovery (down by nearly 1% by the end of two years after the recession is over) compared to rivals who maintain their spend (up nearly 1%). But the real winners are the brands that increase their spend – they grab an extra 2% market share and see their return on capital increase by nearly 3%, well ahead of the other two categories.
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