Gutsy marketers spend into the teeth of a recession. Several of BusinessWeek's 100 Best Global Brands are doing exactly that
by Burt Helm
Every time a recession threatens, executives glare at the balance sheet and wonder aloud about one particular expense: brand building. Trimming the marketing budget can seem eminently sensible. After all, doing so won't hurt product quality or, most likely, next week's sales. As the business climate has worsened in recent months, a number of blue-chip companies have announced plans to cut marketing costs, including Coca-Cola (K) and Visa. U.S. automakers have already done so. As have several hard-hit banks.
Then there are the other guys—companies that refuse to let tough times distract them from their long-term brand-building efforts. Sometimes they see a recession as the perfect moment to get a leg up on a weakened rival. Others strengthen their brands to ward off discount competitors. Still, others feel they have a knockout new product that requires support.
In BusinessWeek ‘s annual ranking of the 100 Best Global Brands, several are keeping their U.S. marketing budgets steady, as a percentage of revenue. Among them are American Express (AXP) (No. 15) and Diageo (DGE) (owner of Smirnoff, No. 89). Others are going further. Louis Vuitton (No. 16), Kellogg's (K) (No. 39), Accenture (ACN) (No. 47), and Kleenex (No. 74) are all aggressively boosting their marketing expenditures as a percentage of expected sales. “There's always pressure to cut,” says Jez Frampton, chief executive of Interbrand, a brand consultancy, which for the eighth year crunched the numbers for our ranking and typically advises clients to spend harder during a recession.
Consumers, he argues, “are more conscious they're spending their hard-earned money. It increases what they expect they should receive in return.”