Last Updated on 24 January 2013
POINT: Paul Williams
And brands with big budgets can fail.
But what’s considered large, anyhow? Dunkin’ Donuts will spend more to launch a single product than what Starbucks allocates for their total annual marketing budget. Large is in the eye of the marketer.
Budget big or small… It’s not the size of the budget, but what you do with it that’s important.
COUNTERPOINT: John Moore
During its formative growth years from 1987 to 1997, Starbucks Coffee spent less than $10 million on advertising. During its first year as a business, Pets.com spent nearly $12 million on advertising [source].
Today, Starbucks is recognized as a global icon with over 17,000 locations in more than 50 countries around the world. Pets.com lived a short life (1998-2000) after burning through millions of dollars in marketing costs.
Scott Bedbury, former VP of Marketing at Starbucks in the mid-90s, once said, “Excessive marketing spending will only accelerate the demise of any poorly conceived company.”
Obviously, Pets.com was a poorly conceived company that failed to build a viable brand from excessive marketing expenditures.
Starbucks, on the other hand, has built a viable brand with very little marketing spend. Which tells us that a brand can be built without a large marketing budget.
While I believe a brand can be built without a large marketing budget, I also believe in spending marketing money to sustain a brand once its been built.
Let’s look at Starbucks again. According to Advertising Age records, Starbucks now spends over $30 million dollars per year in advertising costs. That’s a significant rise for Starbucks that signals the company is no longer building its brand but rather, sustaining its brand.
I believe it takes bigger budgets to sustain a brand’s positioning in the marketplace and in the hearts/minds of customers once the brand has been built.
However a big budget, to Paul’s point, is relative. Burger King has 12,200 locations around the world, about 5,000 less than Starbucks. In 2009, Burger King spent $308 million dollars on advertising while Starbucks spent $33 million. Burger King spent 900% more in advertising than did Starbucks in 2009 to sustain its brand in the marketplace and with consumers.
So yes, a brand can be built without a big budget. But it will take a relatively bigger budget to sustain a brand once it’s been built.