Investment

I’m constantly preaching that marketing is an investment, not an expense. There are plenty of historical proof points, but one that is stark and very recent is the Kraft/Heinz merger.

Megamergers, while good on paper tend to only benefit investors. Working with Kraft, I met some supremely talented marketers at an organization that truly believed that investing in a brand would pay dividends down the road. They invested in new markets, product innovation and would happily test new platforms with mature brands and small budgets.

As an organization, they looked at brands as something with value that needed regular investment.

Fast forward to today, and shortly after the merger, KraftHeinz is in dire straits. While changing consumer tastes play a small role in a drop in sales, Kraft was dealing with the same headwinds rather well when the merger happened.

The key difference is the newly merged company treats marketing as an expenditure, forcing annual budgets to be defended via zero-based accounting. The result has been drastically lower marketing budgets and falling sales. It’s worth noting that many legacy marketers from both companies have moved on, taking their historical brand knowledge with them. Not a huge surprised considering they have valuable experience which has been marginalized.

While brand affinity can help get though hard times, for CPGs, a healthy and regular marketing spend is the lifeblood of a brand, which is incapable of being separated from a product.

The moral here is that can’t cost-cut your way to success, especially when you’re cutting investment in things that consumers will see and experience. A brand has value and needs investment to both survive and grow. While I don’t recommend throwing marketing money at a problem, I do endorse investing in a brand and keeping an eye on sales and brand measures to make sure you’re spending in the the right way.