Why Brand Matters in a World of ROI

I recently read a post on Linked In from someone who considers himself a marketing thought leader.  Here's what he said...

"...I think that 'brand marketing' is overused as an excuse for non-performance or to skirt responsibility for revenue-generating outcomes." 

As a highly experienced marketer, I have to say that this is offensive and completely incorrect.  Perhaps it's the now culture that is guiding this.  I have had many discussions with leadership teams at startup companies who reinforce this way of thinking through their dismissal of brand marketing as something that is a waste of time.  I'm here to say that these are arrogant, uninformed statements by individuals who don't have a clue about marketing or human behavior.

Why Branding Matters 

  • Branding helps people both internally and externally identify and recognize your products and organizational philosophy
  • It differentiates you from the competition
  • Branding helps you connect with customers emotionally
  • Branding provides a consistent framework for acquiring mindshare both in the short term and long term as new products and services build upon the framework 

Let's Talk about What Makes a Good Brand

According to multinational market research firm Kantar Millward Brown, the strongest brands are those that are:

  1. Meaningful: They appeal more, generate greater “love” and meet the individual’s expectations and needs.
  2. Different: They are unique in a positive way and “set the trends”, staying ahead of the curve for the benefit of the consumer.
  3. Salient: They come spontaneously to mind as the brand of choice for key needs.

Data 

Milward Brown’s BrandZ™ valuation tool measures the world’s top brands, isolating the value generated by the strength of the brand alone in the minds of customers.

roi-brandz-portfolio-msci-world-index-top-20-shareholder-ignyte

In a performance similar to that of Interbrand’s Best Global Brand’s, the value of the BrandZ Strong & Innovative Brands Top 20 Portfolio increased 226 percent between 2006 and 2018, compared to just a 50 percent increase of the MSCI World Index.

In the long run, brand-building is a better driver of sales growth than repeated marketing activation initiatives.

One of the main reasons some CEOs fail to appreciate the ROI of branding is that brand value accrues over a longer period of time than the value generated by marketing-driven sales activation.

If you look at periods over six months, brand-building activity drives significantly stronger sales growth than the temporary uplifts caused by short-term marketing initiatives.

Relevancy for Prophet can be boiled down to four critical areas. The most relevant brands are those that are:

  1. Customer Obsessed: Brands that invest in, create, and bring to market products or services designed to meet important needs in people’s lives.
  2. Ruthlessly Pragmatic: Brands that make sure their products or servcies are available where and when customers need them, deliver consistent brand experiences, and make life easier for their customers.
  3. Distinctively Inspired: Brands that make emotional connections, earn trust, and often exist to fulfill a larger purpose.
  4. Pervasively Innovative: Brands that don’t rest on their laurels, but rather push the status quo, engage with customers in creative ways, and find new ways to address unmet needs.

According to Prophet’s Associate Partner Jesse Purewal, the revenue growth of the world’s most relevant brands has outperformed the S&P 500 average by 28% over the last decade.

 

Comparing Brand Building to Activation Marketing 

roi-branding-marketing-activation-brand-building-difference-ignyte

The comprehensive report titled “Media in Focus” shows that optimal effectiveness is achieved when about 60 percent of a company’s marketing budget is devoted to brand building, and around 40 percent to marketing activation.

Investing less than 60 percent in branding precludes the accumulation of the requisite brand equity for future sales growth.

roi-branding-marketing-activation-brand-building-60-40-split-ignyte

Additional Insights

If you are a company with weak branding, the brand messaging, call to action, and payoff result is likely ineffective as well.  Why would anyone click on a crappy ad with bad visuals, and poor bad call to action if the ad right above it is visually compelling, relevant because they're probably seen other ads from the same company with the same creative triggers, and a call to action benefit that is meaningful.  The answer is they wouldn't.  They would click on the quality ad that reinforces the brand promise, has familiarity, and looks compelling.  

Agency Ad 

Here's a case in point.  Recently, a quality agency was promoting advertising services for beauty brands on Amazon.  Here's one of their paid ads. 

 

Compare this to a MAC Ad 

What's the difference? 

For a premium beauty brand, everything is about quality, consistency, and intrigue.  Premium beauty brands rely on high-end photography with edgy model images and compelling product whether it's swatches, on skin or product packaging.  No models, no product and stock bottles that look like Mary Kay's are the exact opposite of everything they stand for.  To beauty marketers, they care about share - it's  the holy grail.  ROAS - who cares?  And honestly, you can have a great ROAS but still lose the share game because you're not spending enough money or taking any risks to acquire new customers in a meaningful way.    

I suspect that while the agency's service offering is solid, the messaging and brand experience is completely wrong.  Net net, the agency has run their ads for the last couple of months and likely had poor results because they didn't understand the target audience nor did they know how to effective brand and messaging the offering. 

Closing Comments 

The fact is few marketers would question the value of a strong brand. The strength and valuation of iconic companies like Apple, Starbucks, IBM, and other Fortune 500 brands are evidence of the importance of brand as part of a company’s offering.

The bottom line is that investing in ongoing brand building will help your company grow its top and bottom line. Measuring the impact simply requires patience and a willingness to reconsider the importance of immediate attribution metrics.

And P.S. it is not just a BS excuse for non-performing marketers. 

#powerfulbrands

#brandidentity

#whybrandmatters 

Sources:

https://www.deluxe.com/blog/six-reasons-why-strong-brand-important-small-business/

https://www.ignytebrands.com/roi-of-branding/

#brandmarketingboise

#smallbusinessmarketingboise 

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