Telstra reported its full-year results last week. Profit up 2.7% to $2.4 billion. CEO pay up 11% to $6.8 million. And, tucked down the announcement where nobody important was looking, marketing investment down 6% to $267 million.
That’s the second year in a row that Telstra has spent less on communications. More than 10% gone since FY24. And the market applauded again. Analysts nodded. Cost discipline, Aussie finance people love the stuff.
But I’d call it something else: dangerous.
First, some context. A decade ago Telstra spent around $300 million a year on marketing. Adjust for inflation and that’s about $390 million in today’s dollars. So Australia’s biggest telco is now investing a third less in its brand than it was in 2016, in a market that has only become more contested, more commoditised and more hostile to price premium.
Telstra’s cutbacks have ensured that it’s fallen out of Nielsen’s top 20 Australian advertisers. It ranked eighth in 2024.
Telstra’s response, when Mumbrella asked, was the standard corporate hoo-ha: the brand remains strong. Ninth on the Brand Strength Index in January. All good. Nothing to see here. It’s a classic example of using the outcomes of previous long investments, to justify pulling back on them. The reason we don’t need car insurance is someone smashed into me last year and my car has been fixed, beautifully.
Brand equity is a lagging indicator. It’s an accumulated residue of past investment, not a measure of current health. Telstra’s brand is strong today because of money spent three, five, ten years ago — much of it by people who no longer work there. Pointing at a strong brand tracker while cutting the budget that built it is like pointing at your reflection to prove you don’t need food. I look fine.
Brands don’t collapse when…
