Does Brand Strength Lead to Better Returns?

Posted by: Burth Helm on March 2, 2009

On a day when the Dow Jones closed down more than 4%, this study sparked my interest: Jennifer Openshaw, the founder of an investment advice website called WeSeed, took a look at the stock performance of the 100 brands on this year’s BusinessWeek/Interbrand Best Global Brands ranking, and found they massively outperformed the S&P 500 from the beginning of 2000 through until December of 2008, with the Best Global Brands’ shares rising an average of 31%, compared with the S+P’s 28% drop.

Obviously it isn’t a perfect correlation — our number one ranked brand, Coca-Cola, fell by more than 20% during that time period. And we’ve also included flameouts like AIG and Merrill Lynch. But that’s not to say no correlation exists. Last summer we took a look at companies spending on advertising despite the recession, and found a disproportionate number of legendary ad campaigns debuted during recession years. I’d be curious to learn if anyone else has done research in this area.

Reader Comments

EmilyC

March 5, 2009 3:12 PM

It seems that in times like this, it makes sense that strong brands before a recession have a better chance of surviving. I might use some generic brands but for the brands I love, if they keep delivering something unique, then, yes, people will turn to them. They are top brands because Americans are committed to them; they are part of their identity. Oh, and WeSeed- what a cool site. I have never seen anything like that before.

Phill Barufkin

March 11, 2009 6:25 PM

It sure does make sense that more indelible brands have stronger connections to consumers. However, it is up to the company to keep the brand up-to-date and to remain relevant. It takes a lot of effort to earn the respect of a consumer and very little to lose them.

Phill Barufkin

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About

News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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