The high cost of treating brand as a line item

When global markets wobble, companies tend to behave in remarkably similar ways. They freeze hiring. They delay investment. They scrutinise every cost. And almost without hesitation, they cut marketing and brand budgets. It is a reflex that has survived every economic cycle, from the dot‑com crash to the financial crisis to the pandemic. The past two years have been no exception.

Across industries and continents, CMOs entered 2026 facing the toughest climate in a decade. Budgets tightened. Forecasts softened. The pressure to prove value intensified. Gartner’s latest CMO Spend Survey shows that marketing budgets as a percentage of revenue have fallen to near historic lows¹. At the same time, expectations have risen. Marketing is now expected to drive growth, improve efficiency, and demonstrate financial impact with unprecedented precision.

In moments like this, brand spend is often reduced simply because it sits inside the marketing budget. Yet most leaders will privately admit that brand is far bigger than marketing. It is the organisation’s reputation, its credibility, the experience it delivers, and the story it tells. Brand marketing is only one expression of it. The brand itself is a strategic asset that shapes how the company is understood and trusted.

This distinction matters. When budgets tighten, organisations often treat brand marketing as discretionary spend, without recognising that brand reputation is a strategic asset that underpins commercial performance. Cutting brand activity may reduce short‑term costs, but it weakens the foundation on which trust, preference, and pricing power are built.

And so, under pressure, organisations retreat to the one thing they can quantify: performance marketing.

This is not strategy. It is self‑preservation.

Performance marketing offers the comfort of immediacy. Dashboards, attribution paths, and conversion curves create a sense of control. But they also narrow a company’s field of vision to the small fraction of buyers who are actively shopping at any given moment. In B2B, that is just 5 to 10 percent of the market². The remaining 90 percent are not clicking ads or filling out forms. They are working, absorbing signals, forming impressions, and building mental availability long before they ever enter a buying cycle.

Brand is what shapes that long‑term memory. And when companies stop investing in it, the damage is rarely immediate. It shows up slowly, in rising acquisition costs, lengthening sales cycles, and a pipeline that becomes harder to fill. By the time the problem becomes visible, it is already systemic.

The evidence is overwhelming. Nielsen’s ROI Compass shows that companies shifting from a performance‑only approach to a balanced brand and performance strategy see a 90 percent increase in ROI³. Move in the opposite direction and ROI falls by 40 percent. WARC’s ROI Genome study reaches the same conclusion⁴. Balanced strategies outperform. Performance‑only plans are punished.

This is not a philosophical debate. It is a financial one.

Nike offers a clear example. In December 2023, weaker‑than‑expected earnings triggered a sell‑off that erased more than 25 billion dollars in market value in a single day, according to CNBC and Bloomberg⁵. In subsequent earnings calls, CEO John Donahoe acknowledged that Nike had “lost its innovation edge” and needed to “reignite brand heat,” comments reported by the Wall Street Journal and the Financial Times⁶.

ASOS experienced a similar pattern. As the Financial Times reported, ASOS’s shift toward performance marketing coincided with rising customer acquisition costs and weakening profitability⁷. Leadership later admitted that the business had become overly reliant on discounting and short‑term activation, and that brand rebuilding was essential.

HubSpot publicly recognised the limits of its performance‑heavy model. Marketing Brew and HubSpot’s own investor communications noted that lead quality had deteriorated and CAC had increased, prompting a strategic shift toward brand, community, and ungated content⁸.

Salesforce, by contrast, invested consistently in brand. “No Software” became a category‑defining narrative covered by the Wall Street Journal9, and Dreamforce grew into a global brand engine highlighted by Forbes10. Analysts credit this long‑term brand investment with strengthening Salesforce’s market position.

To be balanced, we must acknowledge the other side of the story.

There are moments when performance marketing is not only appropriate but essential. Early‑stage companies often need to prove traction quickly. Businesses in highly transactional categories may rely more heavily on short‑term optimisation. In downturns, some organisations genuinely need to prioritise cash flow over long‑term brand building. And in certain markets, particularly those with low differentiation or high price sensitivity, performance can deliver meaningful efficiency gains.

The problem is not performance marketing itself. The problem is over‑reliance.

Performance marketing is incredibly effective at capturing existing demand. But it cannot create new demand. It cannot build trust. It cannot differentiate. It cannot shape preference. It cannot shorten complex buying cycles. It cannot command premium pricing. It cannot build resilience.

Brand can.

Today’s environment, defined by geopolitical instability, economic uncertainty, AI disruption, and rising capital costs, makes short‑term thinking feel rational. But it also makes long‑term brand investment more valuable. Brand reduces acquisition costs. It shortens sales cycles. It increases pricing power. It builds trust. In volatile markets, brand becomes a stabiliser.

The challenge, of course, is measurement. Brand has historically been difficult to quantify in ways that satisfy finance. But that is changing. Modern frameworks tie brand health to category entry points, the buying situations and moments of need that drive commercial outcomes. Mental availability, salience, and familiarity can now be tracked with far greater precision. And advanced measurement systems, from brand lift studies to econometrics, allow organisations to connect brand movement to revenue with increasing confidence.

The companies that win are the ones that understand this. They do not treat brand as a discretionary cost. They treat it as a compounding asset that grows in value the longer you invest in it.

Cutting brand may tidy up a quarterly report. But it weakens the organisation’s future earning power. In uncertain times, most companies retreat. The bold ones advance. And the market rewards them for it.

For CMOs and CBOs who want to be among the bold ones — the leaders who move forward when others pull back — there are three practical actions that make the difference.

1. Reframe Brand as a Business Asset, Not a Marketing Activity
Shift the conversation from campaigns and creative to commercial outcomes. Present brand in the same language finance uses: risk, return, efficiency, and future revenue. Use metrics such as mental availability, category entry points, and pricing elasticity to show how brand strength influences buying decisions long before performance channels ever see a click. Bring case studies from your own category to make the argument concrete.

Why?
Executives do not cut assets that protect revenue, reduce risk, and improve margins. They cut “marketing spend.” When brand is positioned as a commercial asset, it becomes significantly harder to remove from the budget.

2. Build a Balanced Investment Case, Not a Binary One
Map your funnel to show how brand and performance work together. Demonstrate how brand investment increases the efficiency of performance channels by lowering CAC, improving conversion rates, and expanding the pool of future buyers. Use simple models that show the cost of over‑reliance on performance. Present scenarios: “If we cut brand by X, CAC rises by Y.” CFOs respond to scenario planning.

Why?
Binary debates are easy to cut. Integrated systems are not. When you show that performance depends on brand to remain efficient, you turn the conversation from “either/or” to “both/and,” which is far more defensible.

3. Make Brand Measurable in Ways Finance Understands
Introduce a small, focused measurement framework that ties brand movement to commercial outcomes. Use econometrics, brand lift, or mental availability tracking to show how brand contributes to revenue over time. Report brand metrics alongside sales metrics in the same dashboard. Show trend lines, not isolated numbers. Finance teams trust patterns, not anecdotes.

Why?
Brand becomes vulnerable when it is seen as intangible. Once you quantify it — even imperfectly — it becomes part of the commercial system. And once it is part of the commercial system, it becomes far harder to cut.

Footnotes

1Gartner CMO Spend Survey 2024–2025, 2LinkedIn B2B Institute & Ehrenberg‑Bass Institute, “95:5 Rule”, 3Nielsen ROI Compass, 4WARC / Analytic Partners ROI Genome, 5CNBC & Bloomberg, Nike market value drop (Dec 2023), 6Wall Street Journal & Financial Times, Nike leadership comments, 7Financial Times, ASOS profitability and marketing mix reporting, 8Marketing Brew & HubSpot Investor Communications, 9Wall Street Journal, Salesforce category creation coverage, 10Forbes, Dreamforce as a brand engine.