Brand power part 2: How it relates to advertising budgets

by Tony Fannin, president, BE Branded

How does brand power relate to advertising and marketing spend? In other words, how much is enough? First of all, know what to expect from your competitors. This will give you a gauge on how much you need to invest in advertising and marketing to keep up and how much to surpass them. This is a new way to think about advertising budget. It’s no longer tied to percentage of sales. Here is an overview based on where you fall on the brand power scale (see blog on June 13, 2009)

Optimum branding is measures the efficiency of the dollars spent in relationship to the brand power achieved. There are four categories:

Proactive brands – These brands have greater than average brand power. They spend amply to build strong positions and dominance. Their spending is the most effective. (it’s more efficient to stay in motion than to stop and begin again)

Inefficient brands – These brands are usually in brand crisis. They lack strategic focus or fail to fully integrate their marketing efforts (traditional, online, social media, PR, etc.)

Inactive brands – Mostly made up of smaller brands. Less established. Low advertising budgets with predictably low levels of brand power.

Reactive brands – They have impressive brand power and are spending the amount necessary to achieve it. They are here instead of in the Proactive Brand category because their position depends on market factors beyond their control. (a product that becomes wildly successful, but fads as the fad fades. no staying power independent of the trend). They do enjoy strong brand status, but are vunerable if they relax their efforts and break consistency.

A new or little know company can make a lot of progress very fast if they invest in their marketing appropriately. Every person is a new convert. The potential market is wide open. As they become more familiar and more established, the pool of unreached potential market shrinks. The effectiveness declines. ($9 of spend only buys $3 worth of punch). But if the budget is reduced, then your brand power will begin to lessen because it still takes a level of budget just to maintain without losing ground. So advertising budgets needs to remain in proportion to the brand power a company is at and at what level they want to achieve.


About Be Branded

Tony Fannin is of President of BE Branded, an integrated marketing firm who helps clients BE Somebody to their customers. If you aren't somebody, then you are commodity.

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