- Increased brand awareness and loyalty
- Increased brand value
- Competitive advantage
- Smart investment
Recession is in session. We have been hearing it for the better part of a year now. During a recession, many companies focus on cutting costs and reducing expenses in order to weather the economic downturn. However, some experts suggest that increasing investment in branding during a recession can actually help companies improve their financial performance in the long run. GTFO! In this article, we’ll explore why brands should consider spending more on branding during a recession, and look at data-backed reasons to support this approach.
Increased Brand Awareness and Loyalty
During a recession, consumers tend to be more cautious with their spending and are more likely to choose brands that they trust and are familiar with. By investing in branding, companies can build stronger brand awareness and brand loyalty, which can help them weather the economic downturn and emerge stronger on the other side. For example, an analysis by the Harvard Business Review found that companies that increased their advertising spending during a recession had a greater chance of growing their market share and improving their financial performance after the recession had ended.
Increased Brand Value
Another reason why companies should consider increasing their branding efforts during a recession is that it can help to increase their brand value in the long run. According to the BrandZ global brand equity platform, brands that invested in brand-building during the 2008-2009 financial crisis actually increased their brand value by 20% more than their competitors who did not invest as heavily in branding. By investing in branding during a recession, companies can build a strong foundation for their brand that can help them to stand out in the market and drive growth over the long term.
By investing in branding during a recession, companies can also gain a competitive advantage over their competitors. While other companies may be cutting back on their branding efforts, companies that continue to invest in branding can build stronger brand awareness and loyalty, and position themselves as leaders in their industry. This can help them to gain market share and increase their revenue over time.
While it may seem counterintuitive to increase spending on branding during a recession, it can actually be a smart investment for companies that are looking to build long-term brand value and emerge stronger from the economic downturn. According to ICAEW Insights, companies that invested in branding during the 2008-2009 financial crisis gained 3.5 times more brand visibility than those that cut budgets. And we aren’t just talking about established brands here. Brands like Venmo, Uber, and WhatsApp were all founded during the last recession. Imagine life if those brands had decided NOT to invest in growth.
Considerations for Companies
While investing in branding during a recession can be a smart move, it’s important for companies to carefully consider their individual circumstances and weigh the potential risks and benefits of this approach. Some factors to consider include the company’s financial position, its target market, and the competitive landscape in its industry. Companies should also consider working with a branding agency (wink, wink) to develop a strategic branding plan that aligns with their overall business goals.
In conclusion, while it doesn’t seem to make sense at first glance, data suggests that companies should consider increasing their branding efforts during a recession in order to build stronger brand awareness and loyalty, increase brand value, gain a competitive advantage, and make a smart investment for the long term. By carefully considering their individual circumstances and working with an experienced branding agency like Tilted Chair, companies can develop a strategic branding plan that positions them for success in the years to come. If you or someone you know is interested in finding out more about branding, we would love to chat.