Do you ever need to convince clients of the value of brand strategy?
Are you wondering whether it's worth adding brand strategy to your skillset?
It helps to have some hard proof on why brand strategy is worth investing in.
Fortunately, there's a lot of research available now to help. What it shows is:
The answers to the questions in a strong brand strategy have been shown to:
Read on for all the detail…
1. Brands can account for up to 50% of the value of a business - so it pays to know what they’re about
Let’s start with the bottom line. On almost every company balance sheet, the value of intangible assets far outweighs the tangible.
In categories like software, retail, technology and consumer services and goods, the value of intangible assets range from 65 to 85% of total company value.
There are 3 things that account for intangible assets – intellectual property, contracts and brands.
A breakdown of the intangible assets of the 13,000 largest publicly traded companies in the world showed that brands can account for up to 40% of the value of a business.
An analysis by the Marketing Accountability Standards Board (MASB) shows that brands contribute on average 19.5%, and in many cases well over 50% of enterprise value, when the impact of brand on firm cash flow, profits and firm value are properly measured.
So surely you want to be clear on the foundation from which to build up to 50% of your enterprise value? You can't really afford not to.
When you dig deeper into analysis on ‘strong brands’ - the figures get even more compelling.
Over the 25 years that Kantar have been tracking brands in their annual BRANDZ study, the world’s strongest brands have far outperformed stock market benchmarks.
Interbrand have also been tracking the world’s strongest brands for over 30 years. The average value of their top 100 brands topped US$3 trillion in 2022.
“This year sees the fastest rate of brand value growth ever recorded, demonstrating the growing contribution a company’s brand has in driving its economic success. While financial markets have shown significant swings over the last few years, the value of the world’s strongest brands have steadily increased driving customer choice, loyalty and margins.”
Interbrand - Brands As Acts of Leadership: 2022 Best Brands Report
Scott Galloway’s 3 line framework shows that there are 3 major levers any company can play with to increase revenue without having to create new products or services:
1. Cost of goods
3. Perceived value
When customers evaluate a product or service, they weigh its perceived value against the asking price.
HBR - The Elements of Value
Brands directly impact revenue by driving perceived value.
Perceived value is not about money. It's about how a brand is relevant, meaningful, differentiated and appealing to the people a business needs to influence – customers AND employees.
Brand strategy, and all the business decisions, marketing tactics and identity work that follows, is all about identifying, then increasing, the perceived value of a product or service.
Doing this, enables businesses to charge a price premium and attract more customers.
It's why Airbnb redefined their brand strategy from being about cheap places to stay, to the idea of belonging.
Not only did this trigger a refresh of the brand identity, but more significantly, helped them refocus and weather the 2020 pandemic – as they lay out in their letter filed with the United States Securities and Exchange Commission as part of Airbnb’s Initial Public Offering in 2020.
On its first day of trading at the end of 2020, Airbnb’s share price more than doubled the $68 per share price set for its IPO the day before, giving it a market cap of about $86.5 billion, well beyond that of travel giants Booking.com and Expedia.
Redefining perceived value was the kick-start of Nike’s rise to fame and fortune. In 1988 they realised that they were limiting their growth by talking only to elite athletes. The brief that led to the infamous slogan, 'Just Do It', read:
“We need to grow this brand beyond its purist core…We have to stop talking just to ourselves. It’s time to widen the access point. We need to capture a more complete spectrum of the rewards for sports and fitness.”
A New Brand World, 8 Principles for Achieving Brand Leadership in the 21st Century, Scott Bedbury
For Pampers it meant getting out of the weeds of product features to create a a bigger benefit and platform for the brand.
In 1997 they redid their brand strategy, moving away from talking just about dryness, and focusing instead on becoming ‘moms’ partner in every stage of their babies’ development.’ From being P&Gs poorest performer in terms of profitability and market share growth, they grew $1billion year on year with this more valuable brand strategy.
The brand strategy and branding process identifies the associations and image a company wants to build to influence the perceived value of their product, service or organisation. Companies leverage branding to raise perceived value. The greater the perceived value, the greater the potential revenue.
So in general – investing in brand strategy can have a direct impact on revenue growth and the bottom line.
Moreover, specific elements within the brand strategy have been proven to impact business performance.
There are four questions every brand needs to answer in their brand strategy and three lenses you need to look through to answer them well.
Being clear on the answers to your core brand strategy questions is the first step in influencing the bottom line.
Having a meaningful answer to WHY you exist, WHAT you do, WHO you are and HOW you do things... helps in the following ways:
In Greg McKeown’s study of more than 500 people’s experiences across 1000 teams, documented in Essentialism, he found "a consistent reality":
"Choosing one product over another is ultimately powered by the consumer’s emotional relationship with the brand. We see companies with strong brands outperform weaker brands in the same industry by 3:1 in terms of customer acquisition costs (CAC).
All of the above enables brands to charge more for their product or service.
“If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.” Warren Buffet
If you’re considering whether to add brand strategy to your skills, consider that list above. There are not many other skills that have the potential to have such an impact on so many levers of business growth.
Learning brand strategy can also help YOU:
And businesses need your help.
Gartner’s Annual CMO State of Marketing Budget and Strategy report shows that going back to basics on brand – brand building and rebranding – is a key priority for global CMOs this year.
And most are not capable of handling this in-house (58% report not having the in-house capabilities they need to deliver on their goals) .
Yet the budgets are there. The average CMO has 9.5% of company revenue to spend on marketing this year. (And the desire for brand strategy often comes straight from the CEO – which aways gets budgeting priority!)
“Yes, but…brand strategy is really complicated.”
NOPE. The models, jargon and frameworks out there can make it FEEL complicated.
And most of the brand strategy courses out there just give you other models and frameworks to consider but don’t give you the step-by-step process and ALL the practical tools you need to actually DO the job. So you’re left still doubting that you can sell and run a brand strategy project for a client.
That’s why I created Brand Strategy Academy. To fully equip you with the clarity, tools and confidence you need to do brand strategy for any client. It includes a tried and tested model based on my 24 years, 70+ brand strategy projects: of course.
For less than a typical brand strategist’s day-rate, it’s such an easy thing to invest in that will pay back MANY times over.
Are you ready to make a significant impact on your business and your clients'?
Join my next cohort here!