Is branding the most undervalued investment in business?
There’s an old marketing adage that ‘50% of all advertising works – the trick is understanding which 50%’. This wisdom predominantly addresses the dated advertising mindset of sales, but in today’s brand landscape where integrated marketing campaigns need to deliver brand engagement and increase in brand value the old 50/50 equation is no longer your best bet.
WPP brand consultancies The Partners and Lambie-Nairn have collaborated with Millward Brown and BrandZ on the world’s first financially quantified analysis of how brand-building activities drive growth in brand value. Taking ten years of BrandZ valuation data and uniquely combining this with Millward Brown consumer opinions of these brands, the findings finally prove beyond doubt what we at Truly Deeply have always believed; that investing in brand positioning and identity produces markedly greater returns in brand value when compared to, or used in conjunction with strong advertising.
Clearly the best way to grow brand value
The study tracked increase in brand value over ten years and clearly demonstrate where the driver of that value comes from. The results were surprising to say the least in a paradigm that still sees advertising spend far outweigh investment in branding activities. By comparison:
• Businesses saw a 168% increase in brand valuation over ten years when combining a unique and compelling brand value proposition, a distinctively designed brand identity and great advertising.
• Businesses saw a 76% increase in brand valuation over ten years when combining a unique and compelling brand value proposition with a distinctively designed brand identity, but were considered by consumers to not produce great advertising.
• Businesses saw only a 27% increase in brand valuation over the same ten years when producing what was considered by consumers to be great advertising, but built around a weak or poorly understood brand value proposition and without a distinctively designed brand identity.
• Businesses saw a meager 21% Increase in brand valuation over ten years when built around a weak brand value proposition and brand identity, and were considered by consumers to not produce great advertising.
The most remarkable conclusion from this study is the extent that establishing a strong brand value proposition and brand identity (branding) drives brand value growth.
First things first
In our experience, many brands lack a clearly defined, unique and compelling value proposition and a well designed brand identity to communicate that proposition to their customers or clients. What this study shows so clearly is the extent to which the advertising investment of every one of those brands is either inefficient or completely ineffective. With so many businesses focused on their advertising output, the meager difference in brand value increase between those with advertising considered great by consumers, and those with advertising considered poor clearly shows that without the core brand value proposition the advertising investment is getting a fraction of the return it should be.
On the other hand, investing in brand strategy and identity before driving that into advertising and marketing communications will return an increase of anywhere from 50% to 140% in brand value. And with brand valuations ranging from millions of dollars to hundreds of millions of dollars these percentages represent immense bottom line value. There are few if any strategic levers a business has at its disposal that can impact business value to this extent.
Never before has the case for getting your brand definition and brand identity houses in order been so clearly illuminated.
The first step to 7 x brand value growth…
Working with experienced and qualified brand specialists is essential to realizing these levels of improvement in your brand’s value. And with the cost of branding representing a fraction of what most businesses spend on advertising and promotional activity, this report clearly spells-out the pay-off for re-distributing budget to address this need.
Huge recognition is due to the professionals at The Partners, Lambie-Nairn, Millward Brown and BrandZ for putting together this important piece of research. These findings provide the clarity for brand owners of every shape and size across every category to significantly build their brand’s.
The WPP report is published in-full here: www.brandvaluegrowth.com
Obligation Free – One Hour – Brand Diagnostic Session
- Clarify your critical brand components; Product/service expertise, Core customer, Competitors & Compelling point of difference.
- Identify your current brand challenges and opportunities.
- Chart the best way to overcoming those challenges / capture the business value within those opportunities.