Against the Tide

Against the Tide

          
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Against the Tide

Value Creation through Counter-cyclical Brand Development
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    “There are times when taking the greatest risk can be considered the wisest course of action.”

    Carl von Clausewitz


    In 2001, after decades of prosperity and growth, the German advertising industry was caught up in the tide of a general economic downturn.

    It was in this context that The Boston Consulting Group, in cooperation with Gruner + Jahr and IP Deutschland, wrote and presented the study “Against the Tide—Value Creation through Countercyclical Brand Development” between December 2001 and March 2002.

    The study concludes that in spite of recession, there is no immediate cause for panic. Clausewitz’ insight applies particularly well to actors engaged in economic competition: in periods of crisis they should actively seek out opportunities to redistribute the cards in their own favor. Advertising plays a central role in this process.

    This study focuses on the interdependencies between advertising, market position, and corporate value. Examining as many different industries as possible, the study tests the thesis that continuous brand cultivation forms the foundation for longterm growth, leading to superior value development in capital markets. This is especially true during periods of recession or crisis. The results showed that continuity as a principle of success is particularly valid in times of crisis. These situations also provide major opportunities for efficiency: managers who maintain or increase their advertising investment against the general trend can strengthen their brand relative to the competition, build up long-term brand value, and secure their position in both the market and in capital markets.

    The focus on advertising investment should not blind us to the fact that other factors also exert a major influence on commercial success, most importantly the attractiveness of the product range as well as the company's innovation pipeline and sales strength. To have considered all of these individual aspects within a single study would have exceeded its scope. Our message is clear: countercyclical advertising offers enormous possibilities, but countercyclical action should not remain restricted to advertising alone.

    “Against the Tide—Value Creation through Countercyclical Brand Development” is aimed at individuals with responsibility for the economic success of a company and who have an influence on the importance of advertising communication within this context. It is also directed towards marketing and advertising managers, media and advertising agencies, and all those with an interest in advertising and competition.

    Hopefully, we have contributed to a necessary change of attitude regarding continuous brand development and enduring corporate value creation—during the current crisis and beyond.

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