Journal

HOW MUCH FOR A GREAT BRAND?

HOW MUCH FOR A GREAT BRAND?

by Slobodan Jovanovic-Coba

Very simply put, a brand is a business. Like every business, it seeks to grow and become valued because valued brands are those people love and buy into. That in turn adds to the value of the company. And some of them in a big way. Value makes the difference when it comes to transactions of any kind.

Why are some brands worth much more than others? Seth Godin, the best-selling author of business books, wrote, “A brand’s value is merely the sum total of how much extra people will pay, or how often they choose, the expectations, memories, stories, and relationships of one brand over the alternatives.”

GETTING THE FOCUS RIGHT

It all comes to this—we prefer what’s special rather than what’s not special. Therefore, the investment in a brand to increase its value is critical to the growth and success of the company. Today’s biggest brands are quick to appeal to the needs of their customers; they are giving to get. They are the products of complex organizations that focus on their customers’ expectations. Great brands narrow the understanding of their offers and reduce the noise coming from competitors.

They give their customers a better experience and proximity through identity and clear purpose. Because they have a strong sense of whom their customers are, they’re able to address their needs and go beyond that—they can entertain them and make them happier.

COCA COLA BRAND VALUE

According to Forbes magazine, Coca-Cola is worth just a bit less than $183 billion, of which $56 billion is the brand’s net worth. That means a third of everything this huge company owns is embodied in its name, bottle shape, logo, and colour together—the essential components of every brand on the planet.

We interact daily with such valuable brands in more than one way. Coca-Cola spends $4 billion annually promoting its brand. We have confidence in this brand despite staunch anti-sugar drinks campaigns because it’s telling us something, right? That’s why we order Coke (or Pepsi) and not just a generic cola. Consumers trust better-known brands more than others; that fact puts such brands in a lower-risk category. And lower risk translates into higher value.

MAXIMIZING THE BRAND VALUE

To understand where and how real value is created, companies engage heavily in research; they’re looking for more certainty when it comes to spending—investing—in brand promotion.

Recent (2017) research conducted by WPP-owned companies The Partners, Lambie-Nairn, and Millward Brown/BrandZ, shows the results of investments in brand positioning and identity and their consequent value and place in the market. The data amassed came from 100,000 brands in 45 countries. Their 20-year customer-centric research gathered an astonishing 4.5 billion data points to support the conclusions, some of which are pretty straightforward:

• Businesses that combined unique and compelling brand value propositions, distinctively designed brand identities, and great advertising saw a 168 percent increase in brand valuation over ten years.

• Businesses that combined unique and compelling brand value propositions with distinctively designed brand identities but failed to provide great advertising saw a 76 percent increase in brand valuation over ten years.

• Businesses that produced what consumers considered great advertising but for weak or poorly understood brand value propositions and without distinctive brand identities saw only a 27 percent increase in brand valuation over the same ten years.

• Businesses built around weak brand value propositions and identities and what consumers considered poor advertising saw a meagre 21 percent increase in brand valuation over ten years.

As such research shows, investing in brand strategy and identity before in advertising and marketing communications will prompt an increase of anywhere from 50 to 140 percent in brand value. With brand valuations ranging from millions to hundreds of millions of dollars, these percentages represent immense bottom-line value.

GREAT RETURN ON INVESTMENT

The best thing companies can do is invest in identity and positioning a mere fraction of what they invest in advertising and promotional activities. A great example of this is Richard Branson’s Virgin brand. Their great diversification in offer under the same name and driven by the same values that seamlessly blend from activity to activity adds to each offer’s strengths. Such synergy produces direct benefits to all the companies under the Virgin brand and gives them a clear advantage in the market race.

Only when a brand’s identity and position are safeguarded and clearly addressed will investments in broader marketing activities have a fair chance at promoting growth. This means continuous improvement in yearly balance sheets as opposed to trying to close gaps with tactical and crisis- management campaigns.

Marketing expert James Archer wrote, “Marketing is food, not medicine.” He considered it “regular, sustained nourishment that gets your business where you want it—and keeps it there. You need it throughout the day, every day.”

The value the brand brings to the customer is at the core of the branding process. It’s a matter of being responsible toward the world. The more a company shows how self-responsible it is and how it addresses its customers, the more that company can expect an increase—and it could be a dramatic increase—in the value of its brand.

Text originally appeared in Lumen magazine