I've been discussing this topic with both Madison Ave-type guys and a few fellow GKICers and I'm looking for more useful resources on this topic that go beyond a "Hey, Coca Cola spends a lot of money on branding, so everybody should" style of reasoning.
Question comes down to this: Most of us have learned that advertising should produce sales and that the success of any advertising campaign can be measured by the amount of sales it does produce - I'd consider that the direct marketer's credo in a nutshell and I use it fairly often.
Popular opinion on the other hand is that this is only the operative or tactical part of the business, focusing on the short-term and direct effects, and ignoring the strategical, long-term, indirect bigger picture and that spending huge amounts of money on branding can be useful (or essential) to position your product in a premium position, even if you're essentially selling the same stuff everybody else does.
My opinion is this: Branding can be useful if it's tied to an actual or perceived USP, even indirectly. The branding campaign thus doesn't actually have to "sell" your product, but if I have to see the ad three times before I even understand what you want me to buy, I'm unlikely to remember it when making my decision (or, unless I'm a marketer, recognize it in the first place).
I'm personally leaning towards a hybrid, fusing branding and direct advertising to maximize results, Procter & Gamble have a few very strong cases supporting this kind of strategy.
I'm opposed to "Let's spend a million bucks on a cartoon with laughing people and photoshop our softdrink into it", but I'm also opposed to "If your campaign doesn't directly produce sales, it's a waste of money".