In a data driven world the importance of brand has been overlooked by plenty of business leaders who have preferred to focus instead on more measurable and quantifiable areas of activity where investments can be directly correlated to returns. They have considered the historically intangible subject of brand to be too vague, uncertain and unproven to merit attention and have made it a relegated concern. At best, brand-building has been confused with advertising – itself a contentious area in many firms – addressed sporadically and as a peripheral activity disconnected from core business. But this view is narrow-minded and unsupported by the evidence of success of the world’s most valuable companies. Far from being unimportant, an organisation’s brand is central to its being, informing key aspects of business across market strategy and positioning, product, customer experience, communications, talent management, and more. Beyond that, well-managed brands deliver a multiplier effect on investments, enhancing and amplifying the effectiveness of each individual spend.
Last year, we collaborated with Millward Brown and BrandZ on the world’s first financially quantified analysis of how brand building drives growth. That brands have a financial value has long been accepted but how that value is maximised has never been explored before now. Ten years of BrandZ data, covering over 100,000 brands, combined with consumer insight from over 3 million people, helped us to develop the Brand Value Growth Matrix, which clearly demonstrates that investing in brand positioning and identity is a key performance driver and has a material impact on financial success.
The study proves that brands that have built compelling, distinctive and consistent brands over the long term have grown in value to a significantly greater extent than those that have not. By comparing consumer perceptions of brands’ strength of advertising versus strength of branding, it shows that far greater growth in value is driven by strong branding than by strong advertising alone. Specifically, organisations that are perceived to have strong brands and strong advertising grew their brand value by an average of 168% over ten years compared to 27% for those with strong advertising but weaker brands; those with weak advertising but strong brands grew in value by 77% versus 21% for those with weaker brands. These are remarkable differences in financial value that no business leader should ignore.
– Jim Prior, Global CEO, Superunion
To explore why this is the case we can look at the evidence from some of the world’s leading brands. Apple came in at number one in 2015’s BrandZ Top 100 Most Valuable Brands, increasing its brand value to $247 billion, a rise of 67% year on year. Their position at the top of the table may seem unsurprising as their global popularity is something most people take for granted today. However, by no stretch of the imagination has this always been the case.
Apple’s rise to dominance is, in fact, a relatively recent thing. Despite a forty-year history, it is only within the last decade that the business has emerged from challenger status to market leadership. The real truth behind Apple’s rise is not of the soar-away success of the iPhone or any individual product but of its long-term adherence to a consistent brand strategy and identity that has pervaded every new product, user interface, retail environment, or customer experience that is ever created. Starting long before the iMac or the iPod the thing Apple knew – more accurately, Steve Jobs knew – was what kind of company it intended to be. Its single-minded pursuit of that through every action and manifestation of the brand is what has made it one of the world’s most valuable companies. When I talk about building brands, that’s what I mean.
Amazon, Google, Dove and IKEA are other examples of brands that have understood the role their brand must play in focusing all their business activity through the lens of a well-defined brand. It’s no surprise then that they are among the highest growers on our Brand Value Growth Matrix. For those that lag behind in our Matrix, like many UK supermarkets and high-street banks, diminishing brand and business value is explained by their lack of a focused and distinctive brand proposition.
Building a strong brand is not just about consumer perception. It affects an organisation’s ability to attract, retain and motivate talent too. It’s no longer enough for companies to be financially successful – employees and prospective joiners want to see clear articulation and evidence of what the firm stands for. If that is not provided then the best talent will look elsewhere and workforces will operate without focus, further exacerbating the challenge of achieving success.
All in all, the evidence for the importance of making brand a core element of business strategy is clear. So, how should companies act to build their brands?