Brand Investment

October 24, 2024

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How can I show my organization the value of investing in the brand?

Building and fostering a strong brand identity and presence may seem like a no brainer, but it can be difficult to do and even more challening to convince your brand leaders to invest in the long-term. While there is no one right way to do this, focusing on business outcomes and financial benefits can help mitigate doubt. According to eMarketer, 26 percent of global marketers seek to "increase investment in brand marketing" this year, illustrating a growing understanding that a strong brand can yield positive business results.

Brian Mulderrig, SVP at ViralGains, discussed brand building and investment in an ANA article, writing that "proper brand building is a strategic, long-term endeavor that involves cultivating a strong, positive perception of a company in the minds of consumers... Unlike the pursuit of immediate KPIs, brand building doesn't yield instant results. It requires patience, investment and a steadfast commitment to maintaining brand integrity."

Mulderrig went on to say that "the returns on this investment can be substantial. A strong brand fosters customer loyalty and encourages repeat business and can command premium pricing. More importantly, it builds a resilient foundation that can weather market fluctuations and competitive pressures. In the financial sector, where trust and reliability are paramount, a well-established brand can significantly enhance customer lifetime value (LTV)."

Below are helpful resources. Don't forget to check out Going Dark: The Consequences of Pausing Ad Spend and The Value of Long-Term Marketing.

Best Practices and Trends

Communicating Brand Value: Marketing's Business Case for Investment. Nielsen IQ, August 2024.
CMOs often face the challenge of demonstrating their work's commercial impact. Brand building is key to unlocking growth, but it is a long-term investment; its effects on sales and market share are not immediately apparent. It works subtly, cultivating connections, mental availability, and positive perceptions among consumers, which influence their future purchasing decisions as much as what they buy today.

CMO's and brand leaders must strive to articulate the value of brand building in terms that resonate with financial stakeholders. This involves linking marketing efforts to market performance and demonstrating their contribution to the company's success in measurable terms. By speaking a common language with CFOs focused on shared financial outcomes, CMOs can make a compelling case for the strategic importance of their work.
More than a Third of Marketers Will Increase Their Brand Marketing Investments in 2024. eMarketer, February 2024.
Thirty-six percent of marketers worldwide will increase investment in brand marketing in 2024, a 13-percentage point increase over 2022, according to a December 2023 report from WARC. The growing use of AI to streamline content creation may fuel investments in brand marketing. Brand marketing growth may also be the result of a renewed focus on loyalty, as 54 percent of retailers plan to strengthen their loyalty programs this year, according to Deloitte.
The Importance of Investing in Your Brand, according to 450 CMOs. Frontify, November 2023.
WhatsApp. Airbnb. Uber. IBM. Some of the world's biggest brands were built during difficult economic times. Their success lies in the investment they made into their brand. With the world on the edge of another recession, brands face uncertainty again. As we reach this crossroads, Frontify interviewed 450 CMOs in the U.S., U.K., and DACH region (Germany, Austria, and Switzerland) to discover the following:

The key challenges facing marketers
The specific ways they're innovating to get ahead
How their brand investments are paying off

Business Case for Brand Investment. Branding Mag, July 2022.
A strong brand isn't just something to feel good about. It can be a tangible asset with real equity. It means people know what you offer and stand for, how you're different, and where you win. It's also a competitive advantage you can capitalize on in the long term. In one McKinsey 14-year study, top-ranked brands outperformed the world market by 74 percent as measured by returning shareholders. So, if building your brand requires getting resources from others, you'll need to prove your brand is an asset and not an expense (especially if facing a market disruption or possible recession). And that means making a business case for brand investment. This article shows you what that can look like.
Why Brand Building is Actually Worth the Investment. Forbes, June 2022.
It's true that recognizable brands can charge premiums, whereas less-established companies cannot. Moreover, brand equity empowers founders to negotiate for a higher purchase price, which translates to increased value from a merger or acquisition. Neglecting to pursue brand building could be detrimental to the health of a business. Research indicates that branding increases familiarity as well as brand equity, driving sales volume while increasing the overall value of a company. This article discusses numerous reasons marketers should consider developing a robust branding strategy.
The Case for Brand Investment. Siegel+Gale, March 2020.
Though the nature of brand's expanding functions renders it difficult to assess, a variety of sources return evidence to support the notion that the power of a strong brand is more compelling than ever. What is brand value? Today, the impact of brands is not limited to marketing metrics; it can be felt in business outcomes. It is therefore imperative to elevate the brand discussion to the strategic realm and evaluate it via strategic metrics. This compiles multiple studies with perspectives on brand value, brand valuation, and brand investment.
How To Prove Brand Value in the Boardroom. Branding Strategy Insider, July 2018.
How can you prove the importance of investing in the brand to the board? Strong brands positively affect company success by influencing customers, employees and investors (82 percent of investors believe brand strength and name recognition are becoming more important in guiding them in their investment decisions. To ensure you receive the necessary approval from your board to keep your brand alive, evolving and relevant to the business strategy, you will need to speak to them in financial language to help them understand how a strong brand positively affects the bottom line.

Through research to obtain the necessary performance data from a range of internal departments, to simplifying processes, providing a benchmark of your brands success against your competitors and analyzing your brands effect on culture – there are a variety of ways to provide the evidence which will help you have a successful conversation with your board.
Brand Investment and Valuation. MASB, December 2016.
The "brand" is one of the largest assets that a company owns. But unlike tangible assets like factories which are quantified on the balance sheet, a brand's financial value often goes unrecognized. This puts marketing and finance teams at a disadvantage for assessing investments in brands such as media. To bridge this gap MASB sponsored an ambitious project that brought together leading academics, marketing and finance practitioners from six blue-chip corporations, and specialists from several research companies. An 18-month tracking study of over one hundred twenty brands was used to:

Identify a cornerstone brand strength metric - one with the strongest proven relationship to share-of-market and, ultimately, cash flows
Link this metric to other marketing metrics
Validate a practical model for brand valuation that finance teams can easily implement

Brand in the Boardroom: Making the Case for Investment in the Brand. ANA, April 2015.
Joanna Seddon, President of Global Brand Consulting at OgilvyRED, says that brand valuation is about the "how" (your brand drives value), not the "what." The following example was shared:

IBM Tracks the Financial Results of Brand-Building
IBM had always been product-focused, but the "Smarter Planet" campaign stood for a larger ideal that positioned the company as a leader in both business and technology. IBM has tracked a variety of metrics to find that its overall brand message has paid off financially.

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