Strong Brands Survive And Thrive In Recessions
In times of economic hardships, a strong brand is worth its weight in gold. With every player in a particular sector fighting for market share, a well-recognized trademark allows consumers to quickly establish the strengths and dependability of a particular product or service. The value of a strong trademark and brand protection during recessionary periods should not be overlooked.
Take Amazon, for example. The Amazon brand communicates to consumers a level of customer service, delivery expectation and range of products that can be relied on in uncertain times. During the Covid-19 pandemic, despite heroic efforts by many small, independent businesses to stay visible by using social media and other online platforms, Amazon announced in March it had achieved revenues of $75.4bn in the first three months of the year – which equates to over $33m an hour. Whilst other companies have reported mass layoffs, conversely Amazon is hiring staff at a furious rate to keep up with consumer demand.
Other big winners in the Covid-19 pandemic are supermarkets, with Kroger Co reporting a 30% surge in sales for March 2020, subscription video services on demand (SVOD) platform providers such as Netflix, Disney + and ITV and online meeting providers, especially Zoom.
While the times we all live in have led to an increase in demand for these kinds of online services and essential goods, what all these organizations also have in common is a strong brand. Sales of goods and services the world over have traditionally been built upon strong brands. Consumer purchasing decisions are heavily influenced by the sense of consistent quality that a trademark delivers. And, in times of uncertainty, it is human nature to seek out familiarity, as this provides a sense of comfort and safety.
Trademarks in times of recession
It is little wonder therefore, that during the last two recessions, it appears that brand values were not affected and companies (regardless of size or industry) continued to protect and watch their trademarks in the United States at a consistent level.
We took an in-depth look at USPTO trademark activity during the Dot-Com Bubble recession of 2001 and the Financial Crisis of 2008-2009 in our recent trademark report “Trademarks in Times of Recessions”.
So what does our data show us in regard to the size of company trademark portfolios and the effect the past two recessions had on filing activity?
Small, medium and large company filings
Small companies - namely trademark portfolio owners having 1-10 portfolios - suffered the most during the last two economic recessions, experiencing a decline of 29.8%. By contrast, large companies (having 101-1000+ portfolios) recorded a drop of only 5.9%. Medium-sized companies (portfolio owners) were also negatively impacted, with a drop of 25%. Specifically, in 2008 medium-sized portfolio filers were affected the most adversely, followed by small portfolio businesses.
Maximizing trademark budgets in a recession
In 2014, World Trademark Review interviewed several leading trademark counsels in order to share insight in maximizing trademark budgets during tough economic times. One tip was to register in extra Nice Classes where there may be more competition and/or challenges to your filing.
One lawyer explained:
“If you are going to register in a country where there is a strong possibility of what I call third-party interveners, it might be worth registering in a few extra classes to insulate yourself, rather than having a long, drawn-out fight to wrestle those rights away from a third party that shouldn’t have them further down the line. So in a country such as China, where there is a lot of that sort of activity, you may choose to register in 10 classes, even though you are really only using one. That may look like an upfront expense in the budget, but what you are really doing is insulating yourself against opposition costs later on.”
Another pointer was to maximize the use of external sources.
“It’s all about balancing quality and cost. Sometimes you can get both higher quality and lower cost in-house, and sometimes you can’t. The other thing that you should take into account in making a decision is not just the quality and cost, but also what would be the best use of your internal headcount. You don’t have unlimited internal headcount, and there can be times when perhaps there is so much work on, that there is too much for your team to do. So your choice then is either to increase the size of the in-house team or to outsource some of the work.”
The problem with increasing headcount in a recession is that often busy times come in isolated spurts. The risk with recruiting extra people is of course that if the workload reduces at the end of a specific project, layoffs may need to occur – a situation no one ever wants to face voluntarily.
Spend wisely on your brand
Economists are predicting strong competition in the coming months as businesses compete for customers with perhaps a diminished purchasing power. A strong trademark will therefore arguably become even more influential and an invaluable asset to any business, regardless of its size.
Past consumer behavior and our data shows that during a recession:
- The value of a robust and well-protected brand is clearly demonstrated
- SMEs are usually more affected in terms of trademark filing than larger corporations
- There are proactive steps in-house trademark teams can take to maximize their trademark budgets, including filing in multiple classes and outsourcing work
The other truth that the data shows us is that, no matter how dramatic the economic downturn, within a few years, there is strong evidence of bounce back and recovery in industries.
Be data driven in your trademark work
Take a data dive with TrademarkNow and examine the impact of the last two recessions on USPTO trademark activity over the last twenty years. In our latest trademark report we take a look back at trademark volumes and activity from January 1st, 2000 until December 31st, 2019 and discover:
- Which Nice Classes were affected the least and the most
- Which kind of companies were affected the least and most
- Who the top filers were during both recessions
- How the recessions influenced both opposition and success rates
- And more!
“Study the past, if you would divine the future” - Confucius