Branding leads advertising as driver of Brand Value

There are two big questions that brand owners and marketers should be asking about their businesses. The first question, “What is the value of my brand?” is very accurately answered by the BrandZ™ data, as it has been for some years now. But the answer to the second question, “How do I grow the value of my brand?” has been more difficult to discern in precise terms. Until now.

Now, WPP brand consultancies The Partners and Lambie-Nairn have collaborated with Millward Brown and BrandZ™ on the world’s first financially quantified analysis of how brand building activities drive growth in Brand Value. Taking 10 years of BrandZ™ valuation data and uniquely combining this with Millward Brown consumer opinions of these brands, the findings prove that investing in brand positioning and identity produces markedly greater returns in Brand Value when compared to, or used in conjunction with, strong advertising. This data will enable brand owners to prioritize, plan and manage their brandbuilding efforts more effectively, drive superior value into their brands and significantly enhance their marketing ROI.

The headline findings of this new study are:

• Superior Brand Value and greatest brand value growth occur when brands deliver the full combination of a unique and compelling core proposition, a distinctive brand identity, and great advertising. Brands that scored highly on all these criteria over the last 10 years experienced brand value growth on average of 168 percent.

• Brands that have a strong proposition and identity but that are not considered by consumers to produce great advertising, still perform well in brand value growth terms. Their average brand value growth over 10 years was 76 percent.

• However, where consumers perceive a brand to have great advertising but to have a weaker proposition and identity, brand value growth is evident only at a greatly reduced rate of 27 percent.

• Brands considered lacking in all the criteria – strong proposition, identity and great advertising grew in value over time, but only by 21 percent.

Strong brand proposition key to brand value growth

The most remarkable finding from this study is the extent of the Brand Value growth that comes from establishing a strong core proposition and identity at the heart of a brand. The data clearly demonstrates that great advertising is, by itself, insufficient and inefficient. It needs to be underpinned by broader, deeper strategic and creative definitions. While brand consultancies have long argued this point in principle, the data now clearly shows the substantial added financial value this brings: 168 percent growth in value where branding is strong, versus 27 percent growth where it is not, even where advertising is strong. And substantially greater growth in value, 76 percent, occurs where branding is strong and advertising is not, rather than in the opposite case, when advertising is strong but branding is not, 27 percent.

There is certainly no argument against great advertising here. It is abundantly clear from the data that great advertising contributes substantial value to brands. However, the data shows that advertising drives Brand Value, especially so when it is deployed in conjunction with a strong brand proposition and identity.

With brand values running into billions of dollars, these percentage differences equate to highly significant financial amounts and leave no doubt that high caliber brand consultancy is essential for building brand value and strength. Given that the financial investment required to define a strong proposition and identity is, generally speaking, considerably less than the investment required to drive a strong presence in advertising media, any brand owners not currently investing in brand proposition or identity should be encouraged to make an urgent redistribution of budgets to address this. The case for a holistic, multi-agency approach to brand building – horizontality, as we name it in WPP – is made very clear here.

 

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