I had the pleasure of taking part in a roundtable in Manchester with our sister agency Carat last week. It was a great opportunity to talk about how brands can harness the benefits of digital disruption, without becoming so addicted to the short-term hit of paid digital activity (Google, Facebook, etc) that they never invest in brand building. My role in the proceedings was convincing all present that brands are actually more important than ever in delivering business success.

I started with some help from Ricky, who used his skills to create two concept cars, one with a Vauxhall and the other a Mercedes grill and marque. Folk around the table were asked to estimate the retail value of the photo print of a car in their randomly assigned envelope. The Vauxhall tended to be priced at £35k or less and the Mercedes at £50k or more. I ran the test with an online survey and the results were pretty similar, with the Mercedes commanding a 54.6% brand premium.

It's a simple test and clearly, there is much more that goes into the price of a car than the logo, but it points to one of the powers of a strong brand. Strong brands command premium pricing, a greater market share and increased loyalty. And to hammer home the point I referenced a couple of studies:

  • In 2014, Nielson focussed on Financial Services and showed strong brands generate three times more market share than brands with moderate reputations.
  • A longitudinal study of 51,000 hotels in the USA, demonstrated that branded hotels have higher occupancy rates than independent hotels, especially during economic recession.
  • Barclays Global Investors and Boston University found firms with strong brands create value for their shareholders through larger returns with lower volatility than industry benchmarks.
  • Annual brand value studies by BrandZ and Interbrand show the biggest brands outperform market indexes. The five biggest brands in the world in 2018 were Apple, Google, Microsoft, Facebook and Amazon. Only Facebook isn’t in the top five by market cap, and that's because Berkshire Hathaway knocked it into sixth place.

I concluded that society at large, not just marketeers, instinctively understands the value of a strong brand. Countless pieces of research show that brand strength and financial performance are interlinked. BUT, we tend to focus our marketing evaluation on the rearview mirror of financial performance, not the future impact of our work on brand strength. So, my challenge to you, do you know the value of your brand? And what have you included in your 2019/2020 marketing plans to build brand value?

Phillip Lockwood-Holmes, Managing Partner