Four reasons to invest in brand building during times of financial crisis

During a recession, it may be tempting for companies to cut back on marketing and focus on short-term cost-cutting measures or sales activation.

However, investing in your brand during a recession can actually help a business not only weather the economic downturn but also come out stronger on the other side.
Here are four reasons why:

1. Higher sales and market share growth

According to a study by the Association of National Advertisers, companies that maintained or increased their advertising budgets during the last recession saw sales grow an average of 28% and market share grow an average of 3.4%.

In contrast, companies that cut their advertising budgets saw sales decline an average of 37% and market share decline an average of 4.3%

2. Brand building can help increase customer loyalty

In a recession, consumers may be more cautious about their spending.

By investing in brand building, companies can create a strong emotional connection with their customers, leading to increased loyalty.

According to a survey by the Advertising Research Foundation, 84% of consumers said they are more likely to continue doing business with a company they feel connected to emotionally.

3. A strong brand can lead to higher customer retention

In a recession, it can be more expensive to acquire new customers than to retain existing ones.

A strong brand can help retain customers by providing a sense of trust and reliability.

According to a study by Accenture, a 1% increase in customer retention can lead to a corresponding increase in profits of up to 95%.

4. Brand building can help a company stand out from the competition

In a recession, consumers may be bombarded with promotions and discounts from companies trying to win their business.

A strong brand can help a company stand out from the competition and differentiate itself in the market.

Economic downturns often create a sense of uncertainty, and companies may be less willing to take risks.

They may be more focused on protecting their existing market share and preserving cash rather than investing in new initiatives, such as brand building.

This risk aversion is often driven by a lack of confidence in growth initiatives or significant financial restraint, resulting in short-term thinking and goal-setting.

The priority may focus more on surviving the downturn than building for the future.

However, while it may be tempting to cut back on brand-building efforts during a recession, it’s important to remember that recessions are also opportunities.

Companies that continue to invest in their brands during tough economic times can differentiate themselves from their competitors, build stronger relationships with customers, grow market share, and position themselves for long-term growth.

At Continuous, we understand the importance of balancing brand building with sales activation, investing in both short-term priorities and long-term value.

If you’d like to learn more about how we can help your brand, email enquiries@wearecontinuous.net