27.03.03

Companies must continue to invest heavily in their brands if they are to survive in the tough economic climate, according to new research from the Chartered Institute Of Marketing (CIM) and the Brand Council.

The study, which plotted the share price index of leading companies on the FTSE 350, shows that brand equity drives business success in times of downturn, with companies that invest in their brands ahead of their competitors coming out on top when a slowdown starts to bite.

The research commissioned by the IPA examined the prfoitability of 183 UK companies who had experienced downturns. of the companies surveyed 110 chose to cut spend on brand advertising, 53 chose to maintain it and 20 chose to increase it.

Those that increased spending on brand promotion were found to be significantly more porfitable during a recession and also made the fastest profit improvement once the recovery had started. According to the study, businesses that cut investment in brand advertising increasedprofits at only half the rate of those who increased adspend.

Commenting onthe findings, says Peter Fisk, chief executive officer of the Chartered Institute of Marketing, said: “In an economic downturn marketers must defend their budgets by proving that investing in brands drives long-term business value. Brands are powerful tools for business performance and with uncertainty over the economy and falling consumer confidence, it’s up to marketers to use their brands more effectively for short and long-term success.”