Ben Wise on Branding

Watching the world through the lens of the brand

How Wall Street is Killing Brands

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Wall Street (or Bay Street for us Canadians) is lambasted in the press on a pretty regular basis. Their bonuses are too big, they crashed the financial system and caused the recession, they are profligate with the government money they received – pick your reason for hating them.

But an often overlooked aspect of Wall Street is their negative impact on brands.

How does Wall Street impact brands?

In a nutshell, what gets measured gets done. And since Wall Street measures quarterly earnings, companies have to focus on them. The excessive emphasis on quarterly reporting is often counter-productive to building great brands. For example:

  • Need to cut costs quickly? Brand building activities are often on the chopping block (and since your brand is your business system, these cuts can be almost anywhere).
  • Need to boost revenue? Start selling your product through other channels, regardless of how it fits with your strategy.

I am not saying that companies shouldn’t be accountable for how much money they earn. After all, the value of the brand is derived from its ability to produce profits. And sometimes companies need to improve their financials quickly to stay afloat. But the short-termism brought on by Wall Street is in direct conflict with the long-term view required to build a brand. When the short-term is prioritized over the long-term, investors lose out in the long run.

What do you think? Are quarterly earnings calls hurting brands?

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Written by benwisebranding

April 26, 2010 at 4:27 pm

Posted in Uncategorized

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