When times are tough and the economic outlook is uncertain, our natural inclination is to hunker down and wait for the storm to pass. But economic uncertainty – and natural inclination – is no reason to shy away from brand investment. Quite the opposite: building a strong brand is a proven way of minimising risk, growing share of voice and gaining market share.
Gloomier periods in history provide the evidence: a 2010 study found that US brands that invested in advertising during the 1989-91 recession emerged stronger than those that cut back. More recently, Nielsen reported that businesses that continue to build their brands when others pull back can gain the advantage – a phenomenon known as ESOV (excessive share of voice), which ultimately leads to increased market share.
Investor Warren Buffett, who has weathered many a storm himself, is of the same mindset. In his oft-quoted 1986 chairman’s letter, he wrote: ‘We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.’ While Buffett’s focus was market investment, the subtext is clear: in a climate where most cut back, competitive advantage can be gained when you buck the trend – and invest.
So why is brand building so critical during periods of uncertainty? Time and again, we see consumers and businesses looking to brands for a sense of stability, reassurance and belonging. It shouldn’t come as a surprise: when the outlook is uncertain, we seek out the familiar, and are drawn to brands that have the confidence to stand tall and stand firm, despite economic headwinds.