How Important are ads for brands?

What’s happening with brands? Customers are price sensitive; more products are failing; more trips to discount outlets

Changes in promotion spending – it’s up –  advertising has shrunk at the expense of trade promotions.

A longer-term view: looks at “quantity premium” – how much more a brand sells compared to similar brands, and  “margin premium” – Brand marketers want to see a high quantity premium and a high margin premium

Advertising and distribution increases quantity premium; discounting hurts (finding from study that looked at poor performers and good performers).

Strategy and price premiums: distribution and discounting reduce price premium; advertising increases it.

Sum – many brands are flailing, short-term orientation favors discounting, long-term metrics favor advertising

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