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The (Financial) Value of a Brand
How to make the case for investments in brand identity
Brands create financial value for their owners, and well-managed and consistently used brands more so than others.
If you work in marketing and understand anything about branding, you know from a bunch of research as well as case studies that this is true. you know it in your gut. But in case you have to convince a decision-maker in your work to invest in something brand-related: how do you explain why and how this works, and how do you make the case?
Here are some basic primers you might want to use, and even a link to a list of branding ROI calculators that might help.
What is the financial value of Branding?
According to Millward Brown Optimor’s analysis, in 1980 almost the entire value of an average S&P 500 company was comprised of tangible assets (chairs, factories, inventory, et cetera).
In 2010, tangible assets accounted for only 30 to 40 percent of a company’s value. The rest is intangible value, and about half of that intangible portion, close to 30 percent of total business value, is attributed to brands.
In 2015 Millward Brown showed us that in the 10 years before that, the strongest brands in the BrandZ Top 100 Most Valuable Global Brands list increased in value by 102.6%. In contrast, the MSCI World Index, a weighted index of global stocks, had appreciated by only 30%.
Even during the turbulent period since 2006, the BrandZ™ Top 10 Most Powerful Brands Portfolio of stocks grew two-and-a-half times faster than the S&P, proving that investment to create and sustain strong brands delivers superior shareholder returns.
Brand building is an investment, not a cost.
Furthermore, brands that are consistently presented can expect to see an average revenue increase of 33%. VIM Group’s Brand Performance Study and research, resulting in the brand orientation index by Johan Gromark, shows organizations perform significantly better when they have a real brand orientation and a well-organized brand.
