Insights from Brett Gerstenblatt

My son, Andrew, passed a milestone recently. Where once he was almost invisible to adults, he no longer toddles beneath the radar. As milestones go, it may seem minor, but to a seven-year-old it’s a pretty big deal. After all, it’s profound to be suddenly noticed, to find yourself in the ranks of “people who count.”

“Dear New Shareholders: It is my privilege to welcome you to the fast-growing ranks of Citicorp investors . . . between you and me and the ATM, we probably wouldn’t have made it without your help.”
 
Thus writes the tongue-in-cheek Antony Currie in Breakingviews.com, who observes that, within a few short weeks, 148 million U.S. taxpayers will each gain a solid ownership stake in the sprawling and deeply troubled giant. Curry notes (as we did back in April) that this new, huge investor audience might be advised to pack their own breakfast when shareholders meet in about nine months. Last year, to shave costs, Citicorp eliminated the customary bagels and coffee. More troubling, however, it also severely restricted the scope of its annual report, so that all you got was a 10K wrap. (You want a little context? Get it yourself.)

As I wrote then, squeezing the annual, and investor communications in general, saves little money while eliminating an absolutely vital channel for building engagement. I cited studies that show that investors are swayed by narrative as well as numbers, that they want management to communicate more, not less, about their companies and industries.

Recently, I noted that innovative companies are not just content to ride out the recession — they’re taking advantage of the economic disruption to strengthen the fortunes of their brands. Rather than retrench, they’re actually increasing marketing and communications spend, whether to gain share, grow in new markets or strengthen relationships with their constituents.

Obviously, not every company is in position to ramp up spending. Despite economic “green shoots” it is clear that business conditions are still dismal, and that bigger branding and communications budgets may not be in the cards.  Nevertheless, we’re urging our clients not to sit on the sidelines while competitors may be making significant moves in the marketplace. In this environment, it’s simply not wise to throw up your hands and say, “I don’t have the budget.” You may not be able to spend what you want, but what’s critical is that you spend where and how you get the most value.

For better or worse, our deep recession is a truly disruptive event, one that has shaken the game board so completely that nothing is quite what it was. Once-solid assets have plummeted in value, powerful companies have been brought to their knees, and business tenets once broadly accepted now seem dubious in the light of day. Like all business owners at the moment, I’m busy making sure we stay in the game, but despite that challenge it’s my job (and pleasure) to keep an eye on industry trends. And what strikes me right now is how some organizations are leveraging this disruptive moment, not running scared or muddling through, but positioning for — and investing in — what comes next.
 
Periods of disruption, after all, don’t just generate tales of woe. For entrepreneurs, they provide breathing room to fire up the imagination and sow the seeds of the next generation of innovative products and breakthrough brands. Business disruptions also enable strong brands to consolidate their lead, and give niche brands an opportunity to enter new markets or grab market share. This is why, in the depths of a recession, counterintuitive moves are rampant, from companies deciding to launch new products to canny investors buying up shares. It should hardly surprise us, then, that for some companies, marketing spend has turned the corner — that CMOs have decided to increase, rather than decrease, dollar support of their brands.