Branding is the most powerful asset any company can have. But most of the time, it’s also the area that gets the least investment. And yet study after study shows that investing in brand = better returns for the business.
We have known this for years. Back in 2003, The DTI Innovation Report tracked a group of companies identified as effective users of design – Boots, BA, Easyjet, Tesco, Unilever and more, over a decade. The study showed they outperformed the FTSE 100 by 200% over that time.
Given this, the neglect of brand is frankly, a staggering oversight by many business owners who lump ‘off the books’ branding in with the ‘fluffy’ stuff managed by their marketing team.
Of course this isn’t the case with everyone. There are visionary companies that invest heavily in design and branding as an integral part of their plans to build shareholder value – but they’re not the norm.
In Interbrand’s 2013 ‘Best Global Brands’ Report, they measured how much of a company’s value could be attributed to brand.
They estimated that in B2B companies such as GE and Caterpillar, brand value could be worth 10% - 25% of their overall value.
In companies such as Google, Nike and Disney, this rose to between 40% - 50%, and in the likes of Jack Daniels, Burberry and Coke this rose to over 60% of the overall value of the company.
If we look at the sale of Linkedin – a company not yet making a profit – to Microsoft for $26 billion, it’s safe to assume the value of the brand in the transaction was at the very least £2.6 billion and possibly was more likely to be in the region of $13 billion. Not a bad considering the brand is only 14 years old.
So it’s time to change this thinking and get brand and branding due prominence in the forum it deserves - the boardroom.
David Akker, VP of Prophet and a globally respected voice on the measurement of brand value said, “When competition is driven by price rather than brand, brands start resembling commodities, and firms begin to treat them as such. Profits erode.”
Brand value and shareholder value are now inextricably linked. If you claim to be a brand, you need to invest in building that value in your staff and your customers.
The mistake so many make is seeing branding as a cost. A logo on their letterheads or on the top of a website; expensive and unused brochures and branded merchandise.
The smart money on the other hand, sees brand as a guiding light; an organising thought for their business. As something that can manifest in every facet of their people, product, service and communications and is continually and selfishly invested in to evolve, engage and grow.
Great branding that has been created on robust and inspirational foundations can even inform your employment policies and help manage your internal comms and PR nightmares. It can drive your mergers and acquisitions strategy; segment your data, curate content and humanise the 404 error message on your website.
Your brand is what you stand for, everything you are, everything you do and everything you’ll be. And moreover, for those who understand this and invest accordingly, brand pays off big time.